OK I know what you refer to. A stated income or perhaps "no doc" loan. They have their purpose but have been overused.
I don't see how people making 65k afford homes of 525k. There are communities in CA where the average income is $68,000 but the average home price is over a million. IF you make $68,000 a year, you're taking home about $3500 a month or so after taxes. Let's be generous and say $4000. Even if you have 25% down on a million dollar house (but who does? almost nobody) you're paying $6000 a month in a mortgage once you figure taxes and insurance. Even in an exotic loan like a pay option ARM you're at 3 grand plus. I'm no math expert but how does that work?
It gets worse for me when I use my HP12C to figure this stuff out that people signed up for.
Think about it, a new buyer before a payment easily starts out with nearly $700 a month in property taxes before anyone makes a payment.
That is a tough hit to take in the monthly wallet IMO.
A million dollar home will have someone paying at least $1200 a month in property taxes. OUCH!
Here is another thought RR, the states like California have seen a huge revenue bump to the state in new higher property taxes (about 35%).
Remember the trouble with Gray Davis, we had in CA a couple of great years in taxes paid because people cashed in with capital gains before the stock market crashed.
Davis budgeted like this kind of income would be permanent.
The issue is, with the 35% increase, is the state budgeting like it is impossible to see a reversal?
If so, the slam to states like California will be THAT much harder.