>Southland house prices have risen past sustainable levels for most homeowners.
>By BY CHRISTOPHER THORNBERG
>December 28, 2007
>In 2002, the median price of a single-family home in Los Angeles was
>$270,000 and the median homeowner's income was $65,000. With a
>$50,000 down payment, the annual cost of that house (taxes,
>insurance and payment on a 30-year fixed-rate conventional mortgage)
>would add up to about 33% of the median household's income -- just
>under the 35% mark that the Federal Housing Administration calls the
>upper limit of "affordable."
>
>By 2006, the cost of that same house doubled, to $540,000 -- pushed
>by unbridled speculation fueled by unparalleled access to mortgage
>capital. But median income rose a paltry 15%. So today that same set
>of costs come to 60% of gross income.
>
>That might be a manageable burden when home prices are rising at
>double-digit rates, creating new equity that can be accessed to
>support spending -- but not when prices are flat and the home-equity
>ATM is closed.