Strategic Defaults next door

Another New York Times article points out that homeowners with mortgages over $1M are almost 2x more likely to stop paying their mortgages. They highlight Los Altos in the article which is next door to us in Palo Alto and should definitely impact prices in the areas we are looking like Mountain View.

http://www.nytimes.com/2010/07/09/business/economy/09rich.html

Congress has decided not to extend unemployment benefits (more info). Here are some graphs showing unemployment in my area. This may increase the foreclosure rate.

Mortgage interest deduction going away?

An interesting article from the tax policy center says it should:

http://taxvox.taxpolicycenter.org/blog/_archives/2010/5/27/4538831.html

I agree with this in spirit. However, I want any changes in the mortgage deduction to happen before I buy so that the price drop associated with this move doesn't hit me after I make the big purchase.

Buy vs. Rent part 2

The NY Times just put out another interesting article debating buying vs. renting. It specifically says some interesting things about the bay area. I liked the rent ratio metric that they discuss, it was new to me. I also like the mortgage calculator on this article better than the other NY Times mortgage calculator I link in a previous article:

http://www.nytimes.com/2010/04/21/business/economy/21leonhardt.html

Megan's law

I was talking to a friend who just sold his house. He was telling me that he almost sold his house a few weeks earlier, until the couple checked the area for sex offenders. This is an important aspect to consider, especially if you have or plan to have children. In California, you can see all registered sex offenders on a map through the following website:

http://www.meganslaw.ca.gov/

Finding Good School Districts

One area that perplexes me about california is how drastically the quality of a school district can change in just a few miles. The contrast is exemplified by the difference between Palo Alto, and East Palo Alto. These are literally bordering school districts on opposite ends of the spectrum. I was looking around today for a way to visualize where the good schools are located and found the following tool that displays all of the schools on a map with ratings:

http://schoolperformancemaps.com/ca/#37.431796%2C-122.131577%2C11%2C1

and more up to date info:

http://www.greatschools.org/

Good time to buy?

The NY Times article this weekend got me second guessing our choice to start dipping our toes in the housing market. We found a real estate agent and started looking at open houses, thinking that now is a great time to buy. The article questions that logic and mentions 3 metrics as fundamentals, but then kind of leaves you hanging. That lead me to start geeking out over numbers...

1) Housing Stock vs. GDP: I was inspired by the somewhat suspicious housingbubblebust.com to use the Federal Reserve Flow of Funds report as a data source. GDP is in table F.6 row 1, and housing valuation data is reported in table B.100 row 4. I plotted them together and got the following:

This looks similar to what is on the housingbubblebust.com site, but a little more up to date. However, this plot doesn't capture the trend of the ratio very well, so I plotted that seperately:

Interestingly, it looks like most of the correction has already happened but it still has a little to drop. Housing prices are within 20% of GDP, and I assume they will remain slightly inflated (above 1.0 ratio) as long as interest rates are so low. I found myself wishing for the same charts for California, but wasn't able to track the appropriate data sources down.


2) Cost of ownership vs. renting:
For this question, I found the NY times Buy vs. Rent calculator very helpful. I also charted Housing Affordability Index for California (along with Santa Clara, and San Mateo Counties) over the past 10 years. The chart is a little misleading towards the end because the reporting schedule changes from monthly to quarterly, but it still gives you a sense that the affordability of housing in CA is near a 10 year high. Given the previous chart, I would really like to see how this data looks before the year 2000.


3) Ratio of median income to median home prices: According to the Census Quickfacts, the median household income in California in 2008 is $61,017. The California Association of Realtors has more up-to-date information on median home prices (through 2009). Q4 2008 is $249,870, resulting in a ratio of 0.244. This number is pretty meaningless without charting it historically. I had a hard time finding complete statistics for median income in Cal. Ideally I'd be able to drill down to the municipal / county level, too.

Hope this research is helpful to others. If you find any other interesting sources of data like this please include them in the comments below.