When the California Association of Realtors found that their Affordability Index was approaching zero, they decided to do something about the declining affordability of homes in California.
They redefined their index!
The old index told you what percentage of buyers had an income that would let them afford a median-priced home using a fixed mortgage and 20% down payment.* *When it fell to about 14% for the state and below 10% for some counties last year, CAR killed the index.
The new index says:
* buyers only want to buy homes priced at 85% of the median price
* buyers only want adjustable rate mortgages
* and buyers only want to put down 10%
That brings affordability up to 23% in California!* *We're saved!*
(FWIW, that same index would have been at 60% in 2003.)
No, your bank is the one taking the higher risk.* *But the point of an Affordability Index should be to show trends.* *Changing the index to make the numbers higher is just a marketing gimmick.* *And the sad thing is that even after changing the index, affordability is still pathetically low in CA.
I guess the good news is that housing can only get more affordable from here.*
Nah, but I can take the heat, I do like having really no mortgage, I will have a good pension and a great easy part time track coaching job in ER!
Worry not.* No heat from me.
Did something change?* I thought you were in NC, and NC definitely doesn't have a ridiculously overpriced home scheme.
A friend of mine moved to San Jose about 10 years ago.* Bought a new house there for about 200K.* Just sold it six months ago for 3 times as much, moved to NC, bought a house about the same size for 130K.* Talk about perfect timing!
This reminds me of when I went into business with a couple of guys. The president(sales guy) was lamenting that the project we were working on was way behind schedule and way over budget. He was correct and we knew it long before he did. He went into his office and procedeed to run some calculations. In about 1/2 hour he emerged with a big smiling face and announced 'We're right on schedule now - and everything was looking good'
By this time my partner and I had long lost faith in this guy and were already calculating our exit strategy. But this provided many years of laughs as the "deep do do" we were in had not changed an iota.
Did something change? I thought you were in NC, and NC definitely doesn't have a ridiculously overpriced home scheme.
A friend of mine moved to San Jose about 10 years ago. Bought a new house there for about 200K. Just sold it six months ago for 3 times as much, moved to NC, bought a house about the same size for 130K. Talk about perfect timing!
The wife wanted a few extras like Hardy board siding those granite countertops, mouldings, backing up to private woods and lake/swamp depending on the amount of rain we have had.
The cost in the wake county area was 329,000 about 50,000 more than I wanted to spend, BUT we are only in our early 50s and I said screw it she deserves a home that will make her happy.
She worked like a dog for the 20+ years in our marriage she deserves the extras. 8)
By the way this in one beauty of a home custom builder, they will have to take me out in the pine box!
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Join Date: Apr 2003
Location: Hooverville
Posts: 10,802
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Originally Posted by newguy888
By the way this in one beauty of a home custom builder, they will have to take me out in the pine box!
Hey NewGuy, you* are FIRED. Think teak.*
Ha
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Doesn't this sound familiar?
In the 90s it was a new economy and the rules had somehow changed from the previous 130 years. Now it's the affordability index. As far as timing is concern at least we are getting better at spotting this spin. Last time stocks imploded with little warning (couldn't call that a soft landing), this time I think people are a bit wiser and already know what the index was saying for the last few months.
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Yeah I know. I was alluding to the fact that when "professionals" start changing the metrics in order to justify crazy prices that is a sure sign of danger.
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You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes.
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You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes.
* You are not asking me, are you?
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