2012-09-09doctorhousingbubble.com

One of the biggest trends hitting the housing market is the decrease in inventory. You would expect that with rising home values and engineering low interest rates that this would draw some more sellers out. Yet 30 percent of mortgage holders are still underwater. Even a massive rate drop from 8% in 2000 to 3.5% in 2012 for the 30 year fixed rate mortgage cannot increase weak household incomes. For example, in Orange County in California home sales are up by 25 percent yet inventory is down by 29 percent. The median price of $450,000 it down from $645,000 in 2007 but incomes are still weak to justify the current price. In 2000 the price-to-icome ratio was at 3.5 but even today it is up to 6


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