”Survey says” looks at various rankings and scorecards judging geographic locations while noting these grades are best seen as a mix of artful interpretation and data.
Buzz: Typical Southern California first-time homebuyers need to make an extra $54,000 — or 94% — compared to other Americans seeking a starter home.
Source: My trusty spreadsheet’s look at the California Association of Realtors’ first-time buyer “affordability” index for the spring quarter. This yardstick provides a noteworthy window into how financial headaches compare within this important slice of the housing market.
This index estimates what a starter home cost by tallying the required monthly payments on a residence priced at 85% of the median existing single-family home. This purchase would be financed with a 10% downpayment on an adjustable rate mortgage — with property taxes and insurance included.
And “affordable” means in this math that the monthly ownership costs no more than 40% of local household incomes.
Topline
The hypothetical first-time buyer in Southern California needs at least $111,600 of income to qualify for the $3,720 monthly payment required for a $680,000 residence. And this math says just 36% of the region’s households could qualify to buy a starter home in spring 2022 — way down from 43% a year earlier.
Remember, as of June, Southern California homes were appreciating at an 8.5% annual rate, by Realtor math. And the average adjustable-loan rates had risen to 4.3% from 2.6%, according to Freddie Mac.
/*! This file is auto-generated */!function(c,l){“use strict”;var e=!1,o=!1;if(l.querySelector)if(c.addEventListener)e=!0;if(c.wp=c.wp||{},c.wp.receiveEmbedMessage);else if(c.wp.receiveEmbedMessage=function(e){var t=e.data;if(!t);else if(!(t.secret||t.message||t.value));else if(/[^a-zA-Z0-9]/.test(t.secret));else{for(var r,s,a,i=l.querySelectorAll(‘iframe[data-secret=”‘+t.secret+'”]’),n=l.querySelectorAll(‘blockquote[data-secret=”‘+t.secret+'”]’),o=0;o<n.length;o++)n[o].style.display=”none”;for(o=0;o<i.length;o++)if(r=i[o],e.source!==r.contentWindow);else{if(r.removeAttribute(“style”),”height”===t.message){if(1e3<(s=parseInt(t.value,10)))s=1e3;else if(~~s<200)s=200;r.height=s}if(“link”===t.message)if(s=l.createElement(“a”),a=l.createElement(“a”),s.href=r.getAttribute(“src”),a.href=t.value,a.host===s.host)if(l.activeElement===r)c.top.location.href=t.value}}},e)c.addEventListener(“message”,c.wp.receiveEmbedMessage,!1),l.addEventListener(“DOMContentLoaded”,t,!1),c.addEventListener(“load”,t,!1);function t(){if(o);else{o=!0;for(var e,t,r,s=-1!==navigator.appVersion.indexOf(“MSIE 10”),a=!!navigator.userAgent.match(/Trident.*rv:11./),i=l.querySelectorAll(“iframe.wp-embedded-content”),n=0;n<i.length;n++){if(!(r=(t=i[n]).getAttribute(“data-secret”)))r=Math.random().toString(36).substr(2,10),t.src+=”#?secret=”+r,t.setAttribute(“data-secret”,r);if(s||a)(e=t.cloneNode(!0)).removeAttribute(“security”),t.parentNode.replaceChild(e,t);t.contentWindow.postMessage({message:”ready”,secret:r},”*”)}}}}(window,document);
Want to know why so few Americans move to California?
A similar first-time house hunter across the nation needs only a $57,600 income to qualify for a $1,920 payment on $351,480 residence. That’s why U.S. affordability ran 58% this spring — but that, too, was down from 65% a year earlier.
It’s not just Southern California: Statewide, the same novice house hunter needs $123,300 income — $4,110 payment on $750,860 residence. Affordability? 34% spring 2022 vs. 40% a year earlier.
This adds up to a Southern Californian searching for a starter home needing $54,000 more income — 94% — than a typical American. Though, it’s a California “bargain” — requiring $11,700 or 9% less income that the statewide norm.
Local details
How the starter home’s affordability challenge plays out across the region, by county …
Los Angeles: $115,200 required — $3,840 payment on $701,800 residence — 7% less pay vs. California and 100% above the U.S. Affordability? 33% spring 2022 vs. 39% a year earlier.
Orange: $181,500 required — $6,050 payment on $1,105,000 residence — 47% more pay vs. California and 215% above the U.S. Affordability? 24% spring 2022 vs. 32% a year earlier.
Riverside: $89,400 required — $2,980 payment on $544,000 residence — 27% less pay vs. California and 55% above the U.S. Affordability? 43% spring 2022 vs. 51% a year earlier.
San Bernardino: $68,700 required — $2,290 payment on $419,050 residence — 44% less pay vs. California and 19% above the U.S. Affordability? 53% spring 2022 vs. 61% a year earlier.
San Diego: $134,700 required — $4,490 payment on $820,990 residence — 9% more pay vs. California and 134% above the U.S. Affordability? 31% spring 2022 vs. 39% a year earlier.
Ventura: $131,100 required — $4,370 payment on $798,150 residence — 6% more pay vs. California and 128% above the U.S. Affordability? 34% spring 2022 vs. 42% a year earlier.
Bottom line
Call this income gap the price of paradise — or the financially taxing result of various troublesome housing policies. And first-timers must also compete with investors, who’ll often pay up to grab another income-producing property.
I can offer one bit of solace to a first-time Southern California house hunter. You could be looking in the Bay Area.
That’s where a buyer needs a $208,800 income for the $6,960 payment on $1.27 million residence. That’s 87% more pay vs. Southern California and 263% above the U.S. Affordability? Only 28% in the spring vs. 34% a year earlier.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
Source: Orange County Register
Be First to Comment