March Housing Prices Inch Up, Leaving Fewer to Qualify
Buying a house in March became more difficult in California’s urban areas, including Orange County.
Less than a quarter of the households in Los Angeles, San Francisco and Orange counties could afford the average home, the California Assn. of Realtors said Monday.
That was a new low for all three counties, the realtors said, pointing out that a large number of buyers who were chasing the few houses for sale had pushed up prices, meaning fewer people could afford a home.
In Orange County, the realtors said, some buyers are probably spurred by fears that a pending slow-growth initiative, if passed, will push the price of a home beyond their means.
“The appreciation in housing prices has started fueling some demand in and of itself,” said Joel Singer, chief economist for the group.
“There’s fear that there won’t be as much growth in the future, making housing more expensive,” he added.
By contrast, nearly half the households could afford a home in inland areas, where housing is less scarce and less expensive.
The survey covered only detached homes--not condominiums or townhouses--and also excluded new houses.
In Orange County, a household needed an annual income of $59,099 to afford the median price of $193,563 for a home in March.
It took that much income to qualify for a mortgage with a monthly payment of $1,477.
Only 24% of the county’s households earn at least that much, the group estimated.
In February, when the median home price was a much lower $179,999, it was estimated that 28% of local households could afford a house.
In neighboring Los Angeles County, only 25% of all households could afford the median home price of $163,840 there. A household needed income of $50,024 annually to make monthly payments of $1,251.
The situation was even worse in the San Francisco Bay Area, where only 17% of the households could afford a home in March.
Bay Area homes going for a median price of $184,309 required an income of $56,274 to meet loan payments of $1,407.
The Bay Area had the state’s lowest percentage of families who could afford a median-priced home.
But despite the declining number of people able to afford a house, more people are buying homes, the realtors group said.
Statewide, realtors sold 1.4% more homes during the first three months of 1988, compared to the same period last year, according to the group.
In Orange County, realtors sold 5.2% more and said they could have sold more homes had there been more to sell.
“There are a lot of people out there looking for houses because the interest rates have stayed down,” said Doreen Benton, president of the Irvine Board of Realtors.
The rest of the nation looks like a bargain compared to California, where only 31% of households could qualify for the average-priced $151,725 house.
The national average price for a house was $88,700 in March. Nearly half of all households earned more than the $27,082 necessary to afford monthly payments of $677 on such a house.
In calculating the affordable factor, survey-takers assume that buyers are making a 20% down payment and spending about 30% of their income on housing.
The survey also assumed a buyer had a 30-year mortgage at an interest rate of 9.08%, the national average for fixed and adjustable-rate mortgages in early March.
Figures show the percentage of the state and Orange County populations who could afford to buy a median-priced home in the months listed.
Orange County Jan. 87: 35% March 88: 24%
State Jan. 87: 36% March 88: 31%
Source: California Assn. of Realtors March Housing Affordability Index
Median Monthly Min. Annual Percent Selling Price Mtg. Payment Income Qualified United States $88,700 $677 $27,082 49% California $151,725 $1,158 $46,325 31% Los Angeles $163,840 $1,251 $50,024 25% San Francisco Bay $184,309 $1,407 $56,274 17% San Diego $136,483 $1,042 $41,671 30% Orange County $193,563 $1,477 $59,099 24% Sacramento $89,444 $683 $27,309 53% Riverside/ San Bernardino $96,536 $737 $29,475 49
Source: California Assn. of Realtors