California’s massive swing to renting: Only 1 out of 3 California families can afford to buy in today’s market.
ByRental Armageddon continues for California and other expensive metro areas around the country. There now seems to be a consensus that home prices can’t fall and that somehow, the Fed or government will step in no matter what happens. This seems to be odd logic since the Fed didn’t step in during 2007 through 2009 before the market got smashed. Of course in the minds of Californians six years ago might as well be ancient history and the 1,000,000+ Californians that lost their home to foreclosure recently are just like the suckers that lost out during the Gold Rush. The argument for home prices being high usually revolves around the following: the Fed is stuck in low rates forever, inventory is low, foreign money is infinite, your monthly payment is about the same as rent (as long as you make a giant six-figure down payment), local household incomes mean squat. That last point is the most important at least in the long-term. Rents are also a function of how healthy the economy is. Affordability in California is hovering near record lows so it is no surprise that many more households have converted to renters…
