Tuesday, August 18, 2009
The CAR are still nucking futz
The CAR (California assoc of Realtors) has released it's latest affordability index. This one is as retarded as all the rest of them lately. According to the CAR nearly 80% of IE housholds can afford an entry level house.
According to the chart an income $24,450 can buy the typical entry level home that they say sells for $137,260. That is a price to income ratio of FIVE POINT SIX (5.6). Have they learned nothing from the last few years. They think it's ok to try and put a family in a home that is nearly 6 times their income. Remember the traditional ratio is 2.5.
They somehow figure the monthly payment (including taxes and insurance) will be $820 on that $137k house. That might be true if the buyer has 20% down. But let's face it, how many families making $24k per year have $30k in the bank? eh.... NONE!
Even if they could get a loan they would be spending about 50% of their take home pay on the mortgage. That leaves about $800/mo to live on. $800 for food, utilities, gas, maintenance on the house, car payments etc. It's fairly obvious that they're living in a fantasy world if they think someone making $24k should be buying a $137k home. Someone making $24k is probably living at home with mom and dad.
I was making double that in 1988 when I bought my first house for $110k and I had to watch every penny. There's not way in hell I could have afforded that house on $24k or even $34k. I would have had a hard time of it on $44k. Stupid realtors......