Case-Shiller up or not? Extra Math Inside!

Case-Shiller is reporting that home prices in LA are up a little.
In fact, the LA index is up 1.8%.

Great news, except...

The median home price in LA right now is $395,000.
There's a first-time buyer tax credit for $8,000.
And $8000/395000 = 2.03%

1.8% - 2.03% = -.23%

Of course, not everybody's a first time buyer.

But, when you can use $8000 more for a down payment, you can buy $80,000 more house, if you put 10% down.

$80,000 / 395000 = 20.3%.

I'll stop there.
Posted by on Friday, October 02, 2009

2 comments:

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  2. I think one of the things people don't understand clearly is that making housing affordable very directly makes housing prices go UP. When people can pay more, they do, and often for the same property that they would have paid less for. Value is relative to demand!

    Tax credits don't somehow magically make life easier for buyers. It is a nice sentiment but really untrue. The long-term result of this policy is to keep real estate prices high.

    For more about this you might like http://www.nerdblog.com/2008/04/stable-marriage-problem.html
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