General Real Estate Investing

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Account Closed
  • Professional
  • Brooklyn, NY
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Housing Bubble: Why it may be worse than previously thought

Account Closed
  • Professional
  • Brooklyn, NY
Posted Jul 20 2017, 21:33

A housing bubble is a run-up in housing prices fueled by demand, speculation and exuberance. ... Speculators enter the market, further driving demand. At some point, demand decreases or stagnates at the same time supply increases, resulting in a sharp drop in prices — and the bubble bursts. 

If this is the definition of a housing bubble according to investopedia.... LA may be heading into some serious trouble.

Median LA housing price    = $685,000 (zillow avg. of median home value & median listing price)

Income required to qualify = $125,000 (0% down, 4.5% mortgage)

Income required to qualify = $118,000 (5% down, 4.5% mortgage)

Median LA household income = $54,000 (argue accuracy of data with census bureau)

How much home can a household buy with $54,000 = $260,000 

Primary factor driving LA prices = Speculation (may also argue demand)

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