Geoff In La Jolla’s last blog post..Rancho Penasquitos Homes Selling

I’m reporting what is in the news. You are free to comment that is why I have no reason to delete or ban your comments.

Your issue is with the author of the email not the messenger. In the post I’ve provided names, address, website, and email address so anyone wanting to ask questions or comment can contact the author.

Your link is to an article that is now 8 months old. In todays world that is old news. I’m not saying there isn’t relevant data in the article. I am saying it is aged data.

You have mentioned in several comments about the average $26K income affording a home in Tucson. If they have never saved, if they have never owned before and have some equity, if they only have that 40 hour paycheck, then the answer to the question is a simple one. They can’t afford to buy a home in Tucson. And there are many other cities in the country where they couldn’t buy as well.

How are the people living in San Diego, San Francisco, LA, Seattle, Redington, Boston, New York . . . making 26K a year housing themselves when the median sale price for homes in most of those markets are more than double what it is in Tucson?

The median priced home in Silicon Valley in April 2007 was $868,406. You can read about the situation in Silicon Valley here.

Quote: “… analyst reports that 13,100 new jobs created during the last 12 months in Tucson, a 3.5% growth rate, combined with an unemployment rate of 3.8%, the lowest March total for the metropolitan area since 2000, means continued strength in home buying.”

Read this first please: http://www.tucsoncitizen.com/daily/business_edge/28147.php

Are these Walmart, Tacobell, Strip mall or Jobs? $10 dollars an hour will not buy the McMansion Frame/Stucco box for $225K. Period. Do we have jobs being created for folks that can afford a $200K home, right now? If so, please show me where. Tucsonan’s only make an avg. of 26K a year according to the article cited above…

What this article doesn’t take into account:

1. Resetting Mortgages
2. Inflation AKA the silent tax
3. Tighter lending standards
4. The 10K + homes on the market
5. Wage data of these housing miracle jobs

Tucson is floating down the same river that the other bubble markets are currently enjoying. The next two quarters will absolutely astonish you. Then its going to get worse.

There are so many people that are leveraged to their eyeballs. The equity ATM has tapped out and the credit cards are chalk full. What are these people, the majority, going to do? They are going to Walk. That is what they are going to do.

Look at Craigslist for rentals. Two years ago you were lucky to see 10 listings a day. Now its close to 70 per day and the number keeps going up while the price is going down. How do you ’splain that?

Inflation:
With gas at $3/gal the number of folks that thought of commuting to work just got a tad bit smaller. Everything is more expensive; from gas to food to clothes and even wine. Inflation is here to stay, due to the dollar getting decimated on the global market.

Ben Bernake is backed into a corner. His options as I see ‘em; Raise interest rates and finally nail the coffin shut on the great housing bubble OR lower interest rates and let the dollar slide even further while pushing inflation higher and higher. We’ll see… but either way calls for a GIANT price correction in the Tucson Metro area.

Loan standards:
Got loan? With the subprime mess and the massive fraud that took place in the broker boiler rooms; We no longer have access to easy money. Geez, too bad the avg. person only makes $26K a year in Tucson or the massive inventory would be gone in 1.5 months…. right?

You see, back in them old days a person had to bring a, try not to laugh, 20% down payment when buying a home. Not too mention a metric was used to see if you could afford the home in the first place. It was really simple; multiply your annual gross income by 3 and you have a great place to start your price search.

Lets do some math:

$26K x 3 = 78K (not many house in this range, eh?)

$35K x 3 = 105K (still not close)

$50K x 3 = 150K (looking for a double wide?)

$60K x 3 = 180K (good for a townhouse or a small “fixer upper”)

$70K x 3 = 210K (now we are talking)

Question: Given that the median per capita income is $26K in Tucson and these people can no longer get funny money. How many people make over $50K and are actively looking to buy one of the 10K homes on the market?

Question: With rising costs in everything under the burning hot sun; how is a person that makes a great salary of $50K a year able to afford, furnish and maintain a $200K plus median valued home?

I imagine you’ll delete this post and ban my IP… thats fine. The game is up and everybody knows it, but If you do decide to engage in some non-inflamatory debate… I’m in.