Housing Affordability Takes a Fall
While much of the public’s recent concerns have focused on the growing battle between the development community and those seeking to curb burgeoning residential and commercial growth, the affordability factor in housing gets worse.
Prices continue to escalate for both new and existing homes throughout the state; the bellwether, fixed-rate mortgage is crowding the 11% mark, and increasing numbers of young adults are returning to the warmth and comfort provided by Mom and Dad.
With much chagrin, the California Assn. of Realtors reports that its Housing Affordability Index has dropped to its lowest point in nearly two years. A $5,000 jump in the median price of an existing home places the cost at $157,033, allowing only 29% of households in the state to buy that median-priced, single-family detached dwelling.
The current home-buying spree, fueled by concerns and fears that the slow-growth mea-
sures throughout California will lessen the housing inventory, increase home and land prices, has created a sellers’ market in all categories of housing.
Even with the drop in so-called affordability, there seems to be no shortage of buyers for high-end housing.
For example, at a very recent auction of 18 Palos Verdes Peninsula homes, priced at $700,000 and more, 15 of the 18 buyers were Asians, attracted--among a number of reasons--by the highly rated school system. And nothing much exists “on the hill” for under $400,000, according to area brokers.
Meanwhile, significant numbers of young adults--not young marrieds, at least not yet--have resorted to an old-fashioned solution to their housing dilemma.
A study cited in Housing Economics, a monthly publication of the National Assn. of Home Builders, reports that the proportion of sons and daughters aged 18 to 24 who live with their parents rose from 48% in 1980 to almost 53% in 1986 and is increasing.
The comparative figures for 1960 and 1970 were 43% and 47%, respectively, and remained fairly stable throughout the 1970s.
Those in the 25- to 34-year-old bracket staying at home increased from 9% to 11% between 1980 and 1986. Most of the returnees were males.
Incidentally, the study, “Marital Status and Living Arrangements: March 1986,” doesn’t dwell on how Mom and Dad feel about this return to the family hearth.
Another report concerning young adults indicates that the number of single-person households will increase dramatically before the year 2000, becoming the largest household group in the nation.
Dealing with demographic trends throughout the nation, the study, sponsored by Better Homes and Gardens Real Estate Service, predicts that single-person households will top the 31-million mark during the next 12 years.
“In 1980, there were 19 million recorded single-person households . . . yet by 2000, that number will have shown a dramatic 63% increase. This will make singles, currently the third largest household group, the largest household group in America,” says Peter Freundl, Orange-based regional manager of the realty firm.
Meanwhile, married couple households with children under 18, now the largest household group, is expected to reach 28 million by the year 2000, up from the 1980 figure of 25.5-million, and drop into the runner-up spot.
Households of married couples with no children will exceed 26 million by 2000, up from just under 23 million in 1980, according to the report.
And for the first time in housing history, the average buyer of a new or existing home now faces a monthly outlay of $1,000 to pay for conventional mortgage, tax and insurance costs.
Nationally, the affordability index for prospective home buyers has dropped 1% since March, from 49% to 48%, while the cost of the median-priced American home stands at $87,700.
In our market, that figure is certainly a rarity.
