Tuesday, August 7, 2007
The house of Nostradamus, St. Remy, France
If you want to gain insight into why Orange County California is, and likely will remain to be, anti-thesis to the American dream, read this article now from the Dr. Housing Bubble Blog eloquently entitled "Nostradamus in the House".
This piece explains the current housing affordability crisis and possible future scenarios that could either exacerbate, or relieve the crisis to some extent.
The serious challenge for Orange County California today and going forward is that the cost to become a dreamy-eyed American homeowner is complete out of sync with the reality of local gross annual incomes, let alone take home pay. If one wishes to experience a textbook case of household budgetary crisis after signing a typical home mortgage, well look no further. Orange County is the right place to do your research.
Yes, indeed, there are many wealthy individuals and families living here, but we still have a median income in Orange County, which is very telling. The majority of people in residing in Orange County, the median, earn just gross $60,000 per year.
Affording a monthly mortgage payment with homes price at $600K to $700k (homedebtorship) is difficult enough with incomes failing to rise in proportion to home prices every year. Now with the restriction of lending standards and indeed, a reduction of the specially-invented-for-California "unorthodox" mortgage instruments, which were previously abundant and available to anyone that could fog a mirror, the mere idea of "homeownership", or even the "second place option" where most people like to gloat, called "homedebtorship", may be falling further and further out of reach for most residents here.
From the illegal immigrant resident to the local factory worker to the MBA college grad and local tech sales executive, the affordability question remains largely unanswered.
Posted by Markus Arelius at 8/07/2007 11:54:00 AM