This is crazy

No, this has nothing to do with Iraq, Bush, Kerry or anything political.

I'm talking HOUSING PRICES.

The Real Estate Journal (part of the Wall Street Journal) has a story about home prices and if folks thought 2004 would be a slower year, homes not selling as fast and the price not rising as quickly as 2003, well think again.

In Orange County, CA (and South Bay in Los Angeles County), home prices are expected to rise over 15% this year and there is NO inventory available. Ok, ok, there is some but its estimated to be a weeks worth. The number of homes sold in an average week is the total number of homes on the market at this time.

Now with "starter" or "mid priced" homes going for $500K or more, who can afford them? Even if people put 20% down in cash (a dream in this day of credit card debt and no savings) and carry a mortgage of $420K, how can two working adults afford this mortgage pymt unless they are each earning $100K a year plus?

Even with an adjustable mortgage loan, how can they afford it? What happens when interest rates rise? And don't forget about property taxes (another 5K a year minimum) and insurance, and, and, and.

I didn't know there were that many jobs in LA and OC county paying over 100K a year.

When interest rates go up, what will happen to all those adjustable mortgages and the homes they are tied too? If people are able to afford their homes now because the interest rate is only 2% on their ARM, what happens when the rate goes to 4% or 6%?

Are we looking at 1989 again?