Seriously, how do people qualify on 500,000 loans with 80,000 incomes?

[BRinSM]

most desirable neighborhoods are still way above the 4:1 - 5:1 price to income ratio that has been typical in CA for some time. Many areas in inland CA are there or are getting close, but I haven't seen it in my neck of the woods.

[sheri257]

Originally Posted by BRinSM

most desirable neighborhoods are still way above the 4:1 - 5:1 price to income ratio that has been typical in CA for some time. Many areas in inland CA are there or are getting close, but I haven't seen it in my neck of the woods.

I think there will be an Alt-A hit in the next two years that will continue to bring prices in the better coastal neighborhoods down. But I don't think you'll see the same depreciation we've seen in areas like San Bernardino county.

When you look at this Fed map of subprime versus Alt-A mortgages ... San Bernardino is the worst hit with subprime.

http://www.newyorkfed.org/mortgagemaps/

With Alt-A you do see more of a shift to the coastal counties but ... not as severe as the subprime hit.

[CMartel2]

Originally Posted by sheri257

Yeah but the California coastal market has always sold way above 3x income ... for decades now. If you're hoping that the good OC neighborhoods are going to drop to 3x income ... it's never gonna happen.

Oh, no doubt. But the markets in Orange County are still in need of correcting and will do such with tighter reigns on lending practices. You might still see 4.5x to 5x, but the home prices are going to come down from their current insane levels. The whole system is just not economically feasible given the pay of jobs in Orange County (which are being lost right now). Even with people moving in with larger incomes from out-of-state, it's not enough to sustain something as bloated as was the Southern California real estate market.

The State of California increasing taxes isn't going to slow this process, either.