Dr. Housing Bubble 03/27/15

[Crewleader]

The Los Angeles and Orange County area becomes even more unaffordable when it comes to housing: In last two years home prices up 28 percent while wages are up 2 percent.

L.A. is the most unaffordable housing market in the entire country. Beyond the pretense that everyone is rich and has money stashed in their backyards being guarded by Chihuahuas with cubic zirconia necklaces, most in California are living deep in debt. Those buying homes today are either investors, wealthy foreigners, or locals leveraging to the max for that wonderful crap shack. What makes the LA/OC market the most unaffordable is that wages flat out do not justify current home prices. Since LA is a majority renter county, it is important to look at dynamics in this group. One study from UCLA found that LA renters devote nearly 50 percent of their income to rent. Taco Tuesday isn’t only a baby boomer mainstay, it is a necessity to pay the rent. The disconnect only got more profound over the last two years. Housing prices in the LA/OC area went up by 28 percent while wages went up by 2 percent. Thanks to maximum leverage loans, big investor demand, and low interest rates, people can buy a $700,000 crap shack and pretend they are truly rolling deep in cash. All the data coming out is showing that many are flat out pretending and living paycheck to paycheck, even with expensive budgets.



The big disconnect between wages and home prices

http://www.doctorhousingbubble.com/los-angeles-orange-county-wages-and-home-prices-unaffordable-la/

[still_one]

1. I think San Franciso and New York are right up there also

[Crewleader]

3. yes indeed still_one

wages are better in those areas you speak of, but prices are definitely bubble high

[still_one]

5. true, but just like LA, there are a tremendous number of folks who can't afford a house there either

It is really ridiculous . Even during the financial implosion, housing in those areas was still unaffordable.

Part of the problem, is many internationals come over and pay cash for property, so those who have to get a mortgage cannot compete.

[Crewleader]

6. I agree with you

My eye surgeon just left LA and moved here to Florida.

[Demeter]

2. No sympathy here

What cannot continue, will not continue....the Greater Fool Theory has its natural limits.

[Crewleader]

4. most definitely Demeter

it's not going to continue.

[KoKo]

7. Its depressing...nothing was learned from Housing Bubble Years and the Crash...

I can barely listen to or read any financial reporting or news. We had our chance with all the investigative reporting that many honest souls tried to do. But, without prosecution and real jail time accountability we will be headed back into another crash of some kind or the other. What has been done with house with Buffet buying up top local, regional Real Estate agencies was a shocker and the Hedgefunds buying up properties at high prices to Rent... All that was more profit for the Wealthy and trash on the poor, once again.

Sorry to rant. That's why I try to avoid finance these days. It's all lies once again from the usual sources and the public is totally unaware and disinterested. The investigative reporters got nothing for all their effort. It's too depressing.

[Crewleader]

9. rant all you want KoKo, you speak the truth my friend

[Sherman A1]

8. Makes me happy for

my small midwestern home that is almost paid off. Not the greatest and in need of many things, but almost done with the payments.

[Crewleader]

10. Very good to hear my friend.

Breaking the chains from the bank will feel real GOOD and a much easier retirement.

[Warpy]

11. Paying it off feels really good

Having a million bucks of debt hanging over my head to get those acres of stainless steel and granite in the kitchen seems like a miserable way to live.

I knew when those "flipper" shows came back that California was going to be in trouble again.

I'm just waiting for them to show some of these people going into a trashed foreclosure house and realizing that they flipped the same house 5 years earlier to people who also had no way to pay for it.

In the meantime, I still wonder about those California twenty somethings moving into those overpriced houses---are they all drug dealers or investment bankers? Nobody else is making that kind of money these days.