Author Box
Articles Categories
All Categories
Articles Resources

The True Picture of the California Housing Market

April 25, 2012 | Comments: 0 | Views: 78

According to first quarter data for this fiscal year 2012 in the state of California, roughly 55 percent of occupied housing is owner-occupied, with the remaining 45 percent being renter-occupied. Of those who are statistically classified as owning a home, over 75 percent carry it with a mortgage and about 35 percent, or about 5,100,000 homes are near negative equity. It's no wonder such a large number of people are choosing to rent homes in California when a majority of those who "own" a house would likely end up paying to sell. With the largest number of residents in the United States, California is actually a top spot for negative equity, with some 257,000 homes listed as being in foreclosure. Unlisted are roughly 500,000 homes that comprise state's vast shadow inventory.

Recent data from the latest Census indicates that median household income in California is $57,000, while median net worth of a Californian household is $61,000 based on [outdated] figures from 2008 when the numbers were even better than they are now. Here in the Golden State where women herald Louis Vuitton and Prada and every other person drives an expensive luxury car, these numbers seem a gross underestimate. However, FHA insured loans that require only a 3.5 percent down payment allow people with little savings to buy homes and hidden $800 lease payments on those foreign cars only add to the image of affluence that Californians seem bent on maintaining. Clearly it is not just the bubble contributing to this trend of negative equity, but psychology as well.

The median income to median price of a home is extremely important because it shows what investors can afford in a home price. Typically the banks are going to require that you have a 40% - 45% debt to income ratio in order to qualify. This means that all of your debts including car payments, credit card payment, house payments and more cannot be more than 40% - 45% of your income in order for you to qualify for financing. Since the median income in California is $57,000 then the maximum amount of debt one can pay (including the mortgage payments) is $1,900 - $2,138 per month. Take a $400 per month car payment out, $400 per month in credit card payments and $400 out for other payments and you are left with a maximum mortgage payment of $700 - $1,118 which equates to a house worth $138,000 - $221,000. The current median home price in Southern California is about $270,000 which means prices still have to come down in order for people to qualify. The professional flippers I know are finding it is taking an av rage of 2.5 buyers to sell their home at market value due to these financing issues. On top of the housing in California, the state is broke and jobs are leaving the state due to high taxes and an unfriendly business environment. You draw your own solution about California.

Source: EzineArticles
Was this Helpful ?

Rate this Article

Article Tags:





Real Estate

Teenage rebellion is easier to tolerate in book or film form. Take a look back at some of the most well known and loved "coming of age" stories set in boarding schools.

By: Harvey McEwan l Arts & Entertainment l July 10, 2012 lViews: 445

An important thing you have to consider before working out is having a pair of great training shoes. You cannot immediately undergo any physical training wearing inappropriate footwear. If you do so,

By: Steve Hill l Recreation & Sports l July 10, 2012 lViews: 349

Granite is one natural stone that is used for several purposes from dimension stone to countertops to sculptures. The use of granite for building the temples and monuments was initiated millions

By: Steve L Patterson l Arts & Entertainment l July 10, 2012 lViews: 298

Up to 65,000 H-1B visas for new employment may be issued each fiscal year (FY) for professional workers, including medical providers. In general, a person who already has an H-1B and applies for

By: Ann Badmus l Arts & Entertainment l July 10, 2012 lViews: 309

Beside coin shooting, gold detecting or the many other things you can do with your metal detector. There is a large group of people who take their metal detector out looking for old stuff. Not just

By: Candy L Lindsey l Recreation & Sports l July 07, 2012 lViews: 293

Many people want to be writers and you may be one of them. In order to make your dream occupation a reality, you need to have a plan. You also need to work on this plan constantly. These tips from a

By: Harriet Hodgson l Writing & Speaking l July 06, 2012 lViews: 440

Binary options is a new tool used for small investment vehicles that date back to 2008. This option allows for investors to receive a fixed return or certain percent of the investment back if the

By: Denise L Lindenl Investingl June 27, 2012 lViews: 141

This article aims to aid in the education of the novice investor by looking at the concept of 'gearing' in relation to Investment Trusts. The key features of gearing are examined and the effects it

By: Andrew Jenksl Investingl June 27, 2012 lViews: 387

In the current investing climate, Investors and Financial Planners are seeking out alternative investments capable of replacing traditional income streams as low interest rates and volatility in

By: David D Garnerl Investingl June 25, 2012 lViews: 130

An investment in timber is a long-term, steady investment and an interesting option available at the moment. Investing in this type of commodity helps protect investors during these economically

By: Ian R Harlockl Investingl June 22, 2012 lViews: 224

It is the way an investor thinks that makes him a true investor, instead of a gambler. Here in this article, you will find seven key principles for investing which I have personally consolidated for

By: Peter Lowl Investingl June 21, 2012 lViews: 140

Turkmenistan has long been off limits for foreign investors, but the country has seen significant changes in the last few years. Its GDP in 2010 was $41 billion (£27 billion) and a steady growth of

By: Paul S Hendersonl Investingl June 21, 2012 lViews: 154

Discuss this Article

comments powered by Disqus