Many property owners should be shocked to read that California homes are beyond the means of most California residents.  In fact, it's so bad in Orange County, California, that it is touted that only 8% of the residents of Orange County could afford to buy their own home, if they had to buy those homes at today's prices.

In one of the wealthiest countries in the world, only 14% of the population can afford to buy the median-priced home.  This "country" is Los Angeles County, the least affordable metropolis in the nation, according to the NAHB/Wells Fargo Housing Opportunity Index.  Only 1.9%  of the new and existing homes sold between January and March of 2006 were affordable to L.A. County residents earning the median income.  Orange County is ranked #2 on the list.

How did California housing and other Bubbleville markets become so ridiculously expensive?

In a word: Credit.

Without easy credit, and lots of it,  Bubblevilles around the country could never have achieved their epic market values.  Credit enabled 1st time-buyers, speculative buyers, speculative builders, second-home buyers, second-home builders and every other variation of housing market participant/speculator.

Since the California boom relied so much on exotic financing to plug the gap between affordability and purchase prices, the gap between these two widened to extreme proportions.  That gap can't last forever.  It has to narrow eventually, which is what is happening now in Bubblevilles across the nation.

Did You Get An Exotic Loan?

Using Bubbleville California to illustrate - almost 40% of the state's homeowners - compared to 29% nationally - pay at least one third of their income for housing, according to the Public Institute of California.  Worse than that, one fifth of all recent home buyers pay more than HALFof their incomes for housing.  Also, home buyers have increasingly financed their purchase with unconventional loans like ARMs (adjustable rate mortgages), negative amortization and interest-only mortgages, rather than fixed rate loans.  Buyers in Bubblevilles throughout the country have obtained similar loans.

In addition, just under one third of home mortgages initiated or refinanced in California this past year have interest-only features, compared with 1.4% in 2000, according to Loan Performance.  That was okay when interest rates were low.  But they have been climbing and will continue to climb.  Not so good an idea anymore, is it?

Be smart about real estate investing by following the 4-step recipe - plus a two-some

Don't speculate with exotic loans and, dare I say, don't buy at market value.  This is the time to be a bargain shopper.  Be a smart real estate investor by following the 4-step recipe:

1. Buy discount real estate property - foreclosures, pre-foreclosures, tax sales, real estate auctions, real estate repos and other distressed-seller opportunities.
2. Consider commercial real estate investments - apartment buildings, retail centers, storage unit facilities, office buildings.  I have provided you with an awesome commercial loan resource at my website to buy these properties with as little as 10% down (even 5% down on certain property types).
3. Buy in Bargainville - the next hot emerging real estate markets across the country.  
4. Get a mentor.  Learn from real estate investing experts who have already done this successfully.  There are a number of them featured in the Real Estate Investing Guide Section of my website.

Plus a two-some - Maintain or restore your good credit rating and eliminate your debts! This important ingredient is not a must in order to buy real estate, but it sure helps to open up your options and get the best interest rate at the lowest cost for your mortgage.  If your credit has derogatory accounts or you have too much debt, there are proven strategies to legally force the credit bureaus, like equifax [aka myequifax], to remove derogatory accounts from your credit report. There are also effective strategies to greatly reduce your debt, including a one page letter you send to your creditors.

I've done the research to discover three experts who have developed these effective methods to repair your credit and eliminate your debts.  You can check them out in the section Tried and Proven Bad Credit Repair and Debt Elimination Strategies.

Technorati Tags: money, finance, loan, mortgage, credit, credit repair, debt, debt elimination, real estate, investing, housing

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