Tuesday, May 19, 2009

5.6x


I love the C.A.R. They provide no end of amusement. Take this recent press release.
Entry-level housing affordability reached 69 percent

For release:
Thursday, May 14, 2009

Quick Facts:
· C.A.R. First-time Buyer Housing Affordability Index stood at 69 percent in the first quarter of 2009 compared with 46 percent (revised) in the first quarter of 2008
· The median price of an entry-level home in California was $213,040 in the first quarter of 2009
· The estimated monthly payment including taxes and insurance was $1,270 in the first quarter of 2009
· The minimum household income needed to purchase an entry-level home in California in the first quarter of 2009 was $38,090

Let's do that math. $213k/$38k is a gross multiplier of 5.6. They assume a 10% down so the debt multiplier is 5.0. Whatever happened to 2.5-3 times your gross? Never mind, moving on. The $192k mortgage at prevailing rates 5% per bankrate is $1050. Taxes in California @1.3% are $230. Apparently PMI and insurance are free in CARworld™. And that $1280/mo relative to the gross monthly take home pay of $3174/mo? 40%. Am I so old that I remember 28%?

12 comments:

Peripheral Visionary said...

$1280 a month for a housing payment? I can only dream of what that might be like. Here in D.C., $1280 a month covers the payment on the front closet.

(But I have to give them credit for using realistic numbers--$38k is much more likely to be the actual houshold income for a first-time buyer than the $120k++ numbers that real estate professionals sometimes kick around, as if every family were two working professionals with college degrees.)

averagerainfall said...

Anyone want to guess where Serin's coming up with the money to buy an RV, a second van (!!), all while renting his own studio apartment in downtown Sacramento *and* supposedly chiseling away at his debts?

Surely the two-bit operation he's "working" for can't be paying him that well...

Jean ValJean said...

"turning tricks" comes to mind.

Cobradriver said...

PV,
Went to a land auction 2 weeks ago. Auctioneers wife was a realtor.
I mentioned we still have quite a drop ahead here in the high end. Blank look. So I ask her what the Charlotte County median HOUSEHOLD income is...she didn't have a clue.

So I told her. 33K. Most likely less since the implosion.

The look I got was priceless. It is gonna be a long,hot summer here in FL. Oh,prices will continue to crash.

I found out after arriving the auction was not an "Absolute". Owner had 24hrs. to reject the high bid. He did. 23K. This lot started at 175K on the MLS. Now listed at 46K. I think the cash out refi is in the 140ish range.
It is realistically worth 12-15K.

Hey Rob...

Keep em wound up over on CR...I just don't have time anymore.

Chris

edgar said...

Go vote, that'll fix it.

w said...

Most homes in that 213k range are gonna need 5-10k a year of work to rehab them. As far as being "starter" homes do they mean as starter crack houses?

w said...

Rob,

What do you think of playing interest rate roulette with a home equity loan?

Take out the equity at 4.65%, put it into CDs or savings, wait 2-3 years to see if the FED loses control of interest rates.

The equity line is fixed for 30 years when I take the money out. Between interest in a CD and the tax benefit it would not take much to make up the shortfall but the upside could be pretty good.

Mr. S said...

"I was told there'd be no math on this exam."

-America

sk said...

Aren't you going to do an election special Rob ? I'm listening to John & Ken on KFI online as they do their special hour - ahhh fond memories of those two, well just one of them, liberto-anarchist loons.

-K

MaxedOutMama said...

I also want an election special. I know that Rob follows CA munis.

What's going to happen to the muni market in CA if the state goes bust and the local governments are forced to cover all sorts of expenses unexpectedly?

CA's situation has implications for the entire nation, most especially when we start talking wildly of green shoots.

Rob Dawg said...

Election placeholder post is up. Ask your questions while we wait for the results.

Akubi said...

I cannot believe that the state of California is paying for my coworker to have bonding time with his f-ing latest kid! Nothing against the guy personally, but that is pretty f-ed up considering the situation on our hands - oh, and his wife only marginally works on occasion.