Big banks are leaving the building when it comes to the mortgage market

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L.A. housing is expensive, sure. But are you paying too much for your rental? 

It would be reasonable to expect that the increases we’ve seen in
rents and purchase prices in recent years would be roughly proportional
throughout Los Angeles, but this is not the case. In actuality, purchase
prices can soar while rents remain stable, and vice versa—even within
the same neighborhood.

We used standard 28 percent "front-end" debt ratios and a 20 percent down payment subtracted from the NAR’s median-home-price data to arrive at our figures. We've incorporated available information on property taxes and homeowner’s insurance costs to more accurately reflect the income needed in a given market. Without a significant ramp-up in new home construction and more homeowners listing their homes for sale, buyers are likely to see little relief in the form of slowing price growth in the months ahead. 

The housing market is overheating and you can sense it when you speak to house humping enthusiast.  The housing market can do no wrong and a correction isn’t even in the realm of possibility according to their views.  But even recently, the National Association of Realtors recognized reality when they stated the obvious: rising home prices with no rise in household incomes is not good.  This is why in California we are facing rental hijacking.  People are now desperate to buy and are getting all kinds of odd mortgages including those that come with zero percent down basically shifting a large part of the risk to the lender.  These mortgages only make sense if you believe housing will never go down.  Many Millennials are still struggling to buy given their weak income growth.


Is the New American Dream to rent?  At least that is what it looks like if we track the home ownership rate over the last decade.  Millennials are moving into their prime house lusting age yet somehow, a flood of buying is simply not happening.  Renting continues to dominate the recent trend of household formation.  It was interesting to see that out of the top 10 metro areas for renters, 6 of them reside here in California.  There is a bit of hope, Poppy-loan is trying to capitalize on the low down payment crowd.  What has become clear is that California is now trending towards renter-heaven.

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