San Diego mortgage bite remains mighty

At 35.6% of income, it's a bit better than renters' 42%

Despite the staggering rise in San Diego home prices (the median is more than $500,000), the percentage of your income going to your mortgage is only a little bit higher than it was in the 1985–2000 period, according to latest Zillow figures.

In the fourth quarter of last year, San Diegans shelled out 35.6 percent of median household income for a mortgage. Nationally, the figure was only 15.8 percent — less than half.

But between 1985 and 2000, San Diegans paid 34.1 percent of household incomes for a home. So the bite is about the same.

But it's a mighty bite. Of the 35 largest metro areas, only Los Angeles (43 percent), San Francisco (42.2 percent), and San Jose (42.6 percent) were higher at the end of last year.

It's a similar situation for renters. In San Diego, the percentage of income required is 42, compared with 29.2 percent nationally. Only three metro areas are higher: Los Angeles, San Francisco, and Miami.

That 42 percent, though, is up considerably from the 34.6 percent in the 1985–2000 period.

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Just what do the people who buy the "average" home do for a living? San Diego employers must pay more than they did when I was working. Are there any hourly workers buying a home? If so what do they do? I am sure that the 35.6% as stated is of gross income and does not include taxes and insurance. With the high cost of utilities my guess is that the total figure to own a home is closer to 50% of net income.

AlexClarke: Yes, this does not include taxes and insurance.What's more, a family of two adults, one pre-school child and twos school-age children, must make almost $100,000 a year to make it in San Diego County.

In San Francisco and San Jose (basically, Silicon Valley), very high incomes offset high mortgage costs. That's not true in San Diego. How do people make it? Debt is one way. Working in the subterranean economy (off the books) is another. Best, Don Bauder

Rents are even worse. In 1973, I rented an extra-spacious house on an R-1 lot on Point Loma with a nice view of the bay and downtown, Mexico, etc., and paid $280, which was a lot in those days. That would be only a little over $1,500 in today's money, but just try renting it today for less than $3-4 thousand or so.

AlexClarke: A small room. Best, Don Bauder

When I moved to San Diego in 1981, I rented a palatial studio apartment in this building for $190/month: https://hotpads.com/3155-kemper-st-san-diego-ca-92110-tqwagv/pad?orderBy=lowPrice.

355 square-foot studio -- asking rental price now $1250

rwm2: The only solace San Diego has is that rents have zoomed in other metro areas, too. Best, Don Bauder

The equivalent today would be about $500. A 250 percent increase in real terms. So what factors are at play here?

Flapper; As the story says, rents eat up 42 percent of household income. That is really high. Best, Don Bauder

Flapper: Although the Federal Reserve is being cautious, interest rates are likely to rise unless the economy tanks. If interest rates rise, the situation could worsen. Best, Don Bauder

I have been around for several real estate adjustments. As interest rates go up, and they will as they have been artificially low, property prices will come down.

Flapper: Koyaanisqatsi! Huh? Best, Don Bauder

"World out of balance" (more or less) in Hopi. Also a movie.

Flapper: I have never attempted to learn Hopi. Also, my wife and I go to few movies, but we are swearing to go to more, because we have seen some very good ones recently. (Fences and Manchester by the Sea were two extremely good ones.) Best, Don Bauder

It's an "oldie" but a mind-bender. Just Philip Glass' music and fantastic, tremendous editing of some very creative footage. See Wikipedia.

Flapper: I have never been a fan of Glass's music -- although not a severe critic of it, either. We'll check out the movie. (We don't have Netflix, though.) Best, Don Bauder

It's and unreal reality, not a pleasure. It's a giant looking-glass.

Best to see in a theater. Short of that, on a big screen, up close, with the sound almost to tortuous levels.

But it will slap some sense into you if you have sense enough to bear it.

Flapper: Glass has written a giant looking-glass. A well-nigh perfect arrangement. Best, Don Bauder

AlexClarke: If rates go up, bond prices will definitely go down, perhaps to the point that bonds will be an attractive investment again, but it looks like that will be several years away. Stock prices may or may not go down. Real estate? Like stocks and bonds, prices are already very high, greatly because of the inordinately low interest rates that, generally, pulled us out of the late 2007-early 2009 Great Recession. The Fed says it will only raise rates very slowly, but the Fed's moves aren't the only determinant of long-term interest rates, such as mortgages. Best, Don Bauder

In all candor, a lot of the people I grew up with that went on to buy homes in San Diego County were helped with a generous down payment supplied by their parents. These of course were the same kids whose parents paid their college tuition.

Ponzi: Those kinds of subsidies are acceptable. It's public money subsidies for private businesses that must be abolished. Best, Don Bauder

Flapper: Ah, but diploma mills and for-profit universities (sometimes they are the same) are expected to do very well under Trump. Best, Don Bauder

Some advertise themselves as "non-profit." What's that mean?

Flapper: Many of the for-profit universities have stocks that trade. They can't say they are non-profit. Maybe they are losing so much money that they throw around the word "non-profit." Best, Don Bauder

No wonder they can trump the gummint.

Flapper: The stocks of for-profit colleges and universities began rising sharply the day after the election. I will bet that Trump will do nothing about these scams. Best, Don Bauder

Every first time buyer that I've helped buy a home has used one of the many first time buyer programs that provides the down payment (i.e. CalHFA or the VA benefit). Depending on the program, some grants do not have to be paid back. They just have to have good credit (640+ FICO) and income to meet the debt to income ratio. It's certainly not impossible, and with a certified lender able to utilize those programs, people can buy homes here. Gone are the days of having to have 20% down plus closing costs. These programs are helping our residents become owners rather than remaining renters dealing with rising rent rates.

I thought that the lending requirements were tightened up. If people are allowed to put little down then we are headed for another real estate disaster.

AlexClarke: History doesn't repeat, but often rhymes. The bubble that causes a panic this time may not be high real estate values and dubious mortgages placed in derivatives that explode. That was the 2007-2009 disaster. Maybe this time it will be a stock market bubble. Best, Don Bauder

LoreleiTaylor: I hope you are right. Best, Don Bauder

Hey, a commission is a commission, no?

Then there are other kinds of commissions that go unpunished . . .

Flapper: But the second kind of commission is often committed by somebody who has been raking in the first kind of commission. Best, Don Bauder

Flapper: In your punning, you could be struck down by lightning. Best, Don Bauder

If it is Thor's will, what can I do?

AlexClarke: What will happen if Trump succeeds in eliminating the new agency for protecting consumers in financial matters? That will be a disaster. Best, Don Bauder

She PERSISTS! Do likewise. It's called CITIZENSHIP.

Flapper: Who is the "she" you are alluding to? Best, Don Bauder

Flapper: I agree that Elizabeth Warren is one of our most outstanding citizens. Best, Don Bauder

I would like to have been a fly on the wall at DNC when her name came up. Hasn't anybody leaked anything?

That's why I will never a DNC nor a GOP be.

Flapper: And I will bet you would never be a member of the KKK either. Best, Don Bauder

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