I found this article in the Sacramento Bee (login required) today entitled "Scraping by on Mortgages". We should all know by now that because of the utterly insane run-up in the prices of houses in California the typical Californian commits well over half of his monthly income to paying the mortgage (as opposed to the traditional roughly 30% or less). You would think, like the SacBee, that would indicate that California is the most financially stressed state in the Union. But somehow, almost miraculously, month after month as far back as I can remember, DataQuick concludes (always the last paragraph) that "indicators of market distress are still largely absent".Some choice quotes:
Last year there was no place where people stretched their pay harder to buy one than California. A new analysis [by Moody's] of housing and financial data portrays the state’s homeowners as the nation’s most financially stressed.Where will our children live? Why do we not even care, really? Does profit take precedence over our kids? I think this is more than enough reason to completely remove the profit incentive from real estate. It's about time; things have gotten too out of hand.
Moody’s survey shows the growing financial pressures on California households by ranking 10 more Golden State areas in the nation’s top 11. All are places where housing prices have skyrocketed ahead of wages since 2000. The findings have implications in a state where nearly three-fourths of recent homebuyers have adjustable-rate mortgages that are scheduled to take even bigger chunks of their monthly pay.
In all, 28 of the first 50 slots on Moody's list are in California.
"My house payment is a little over half of my income," said Jason Thompson, a heavy equipment operator who feels both proud and stressed to be a 21-year-old California homeowner...he said his financial stretch is "not very nice, especially when gas is $3.30 a gallon."
Salinas Mayor Pro Tem Jyl Lutes said being squeezed at home makes people less public spirited and more likely to reject bond issues for schools and infrastructure. A cruel natural selection of rising home prices also is pushing people out of hometowns and farther from lifelong associations and jobs. "We lost 900 kids this year in the Salinas school district," Lutes said. "Where I teach, a small district, we lost 30. It has that ripple effect. It hurts everything."
Earlier this year, a San Francisco-area business association, the Bay Area Council, released a poll showing that 40 percent of Bay Area residents have seriously considered leaving. The reason: housing's big bite from their salaries.
"A poor family in Louisiana is actually doing a lot better than a poor family in California," said Deborah Reed, research fellow with the Public Policy Institute of California.
None of this is new in a state where both gushing happily and fuming over rising home prices have become part of the psyche. ‘We had a campaign 25 years ago called, ‘Where will our children live?’ said Leslie Appleton Young, chief economist of the California Association of Realtors.
If nothing else works, boycott housing.
4 comments:
"Northern California is a special place and people want to live here.
Not to sound too facetious, but we could replace N. CA with San Diego, OC, Santa Barbara, SLO, Monterey, Portland, Seattle, and Vancouver. I've seen all those places described as "special" in realtor write-ups. I suppose this place is special enough, but with many people leaving the SFBay, and residential re investment tapering off, will supply be tight forever? Let's wait and see.
"It allows the U.S. to remain competitive in a global economy."
How is that--by increasing overhead locally?
On the contrary, if locations with less overhead attract bright people, these areas will be quite possibly better prepared in the future to develop competitive ideas. High home prices might look great to owners, but we need to consider long-term fallout.
I thought everyone wanted to live in either Boise, Salt Lake City or El Paso. What's going on here??
Within the last few days, they released a report of the percentage of worker's incomes that go toward housing. Some places in California averaged in the 60% range, something that is very, very frightening.
What surprised me is that Sacramento averages in the mid-30s, only slightly above the sane level. And yet we're still considered 57% overvalued. I'd have to see how the poll was conducted to understand if this is self-reporting or not.
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