New Blog 2: House Prices In California

Thursday, 8 November 2012

House Prices In California

The argument that high home prices crush the middle class seems to be gaining solid traction. Something that would appear to be self-evident is actually an under explored topic in academia. A few articles now focus on what we’ve been talking about for many years. Household incomes do not justify home prices in many California cities and the only reason prices were driven so high, was because of speculative investments and high leverage mortgages. A few other fascinating articles even discuss the drain from the tech boom in California because people started shifting resources and attention to speculating on trading homes instead of innovation. They took their eye off the ball. The data does show that the group hardest hit by high home prices are those that fall in the middle class. California actually may be doable with rentals or apartments but once home ownership is thrown into the equation, the numbers get flipped upside down.