SF Chron: Despite Housing Bust, California home prices still unaffordable

[El Pinko]

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/02/14/BU5AV1K01.DTL


California home prices still unaffordable
James Temple, Chronicle Staff Writer
Thursday, February 14, 2008

Despite recent declines in the cost of California real estate, median home prices remain unaffordable throughout the state, according to a report by a liberal research and advocacy group calling on the governor and state lawmakers to confront the issue.
The authors of "Locked Out 2008: The Housing Boom and Beyond," the study released today by the California Budget Project of Sacramento, said median incomes aren't enough to buy median-priced homes in every county it studied, 36 of the state's 58. The report assumes homes are out of reach if households have to dedicate more than 30 percent of their income to housing costs, the level above which the U.S. Department of Housing and Urban Development says people may have difficulty affording necessities such as food, clothing and transportation.
More than half of homeowners with a mortgage exceed that level in California, according to a 2006 survey by the U.S. Census Bureau. The lack of affordability is acute in the Bay Area, where the earnings required for purchasing a median-priced home is more than double the median household income in every county but Contra Costa and Solano, the California Budget Project said.

....

The housing downturn and credit crisis sparked by last summer's rising default rates have driven down the state's median price for new and resale homes and condos by 16.9 percent, from $484,000 in May to $402,000 in December, research firm DataQuick Information Systems said.

[Wcross]

1. Give it time, the price adjustments are just starting.

Now that lenders have figured out that sub-prime lending is a bad business decision only people who qualify using traditional mortgage guidelines will be granted a loan. That means loans that are no more than 28% of the borrowers gross monthly income.
How is the government going to confront this issue? The situation will correct itself over time.