Real estate writers rarely cover housing affordability. It’s not a sexy topic.
But seasoned real estate investors keep a watchful eye on housing affordability.
Rising home prices in California’s coastal communities — San Francisco, Los Angeles and San Diego — is shutting out a big chunk of the state’s home buying universe. As prices soar, affordability declines, according a new report from the California Association of Realtors. Fewer and fewer Californians can actually afford a median-priced home. .
Just 36 percent of California residents were able to afford the median-priced home in the second quarter, compared with 51 percent during the same period last year, the realtor group reported. In Los Angeles County, 37 percent of home buyers could afford a median-priced home. In Orange County, only 23 percent of buyers could afford a home, making it the most expensive place to buy a home in southern California.
Buyers need to earn a minimum of $79,910 a year to qualify for a home at the statewide median price of $415,770, according to CAR.
“When we hit 17 percent affordability the market corrects itself and we start all over again,” predicted Scott Mednick, president of the Orange County Real Estate Forum, an investors club based in Irvine, Calif., and a broker who has seen a couple of cycle corrections in his16 years in the business.
Now that home prices and mortgage interest rates are rising, fewer buyers can afford a home.
“Rapidly rising prices in coastal southern California are pushing buyers inland to more affordable Riverside and San Bernardino counties,” wrote John Burns, owner of John Burns Real Estate Consulting in Irvine, Calif.