Fewer Californians Able to Afford Homes
Rising home prices and interest rates left a growing number of Californians unable to afford homes in February and turned Orange County into one of the least affordable areas in Southern California, according to an industry survey released Thursday.
Only 28% of the county’s households could afford to buy the typical home, down from 31% in January and 36% a year earlier, according to the survey by the California Assn. of Realtors. San Diego County recorded the same rate, down from 39% a year earlier.
In Los Angeles County, 36% of the households could pay for the typical home in February, a drop from 40% a year earlier.
Throughout the state, housing affordability slid to 32% from 43% a year ago, the survey found.
As the rate falls, businesses will more probably “expand or relocate outside of the state,” said Leslie Appleton-Young, chief economist for the Realtors group. Higher housing costs, she said, will drive up salaries and make it harder for businesses to recruit new workers.
Anil Puri, an economist at Cal State Fullerton, said businesses in fields such as tourism and restaurants, which depend on lesser-skilled employees, “will be impeded” because they can’t find workers, forcing those firms to pay higher wages.
“Unless we can provide affordable housing, it’s going to have a negative impact on future growth,” Puri said.
Analysts said that mortgage interest rates, which rose to 8.5% in February from 6.9% a year earlier, also helped erode affordable prices.
The percentage of households in Orange County that could afford the median-priced home--the price at which half the homes sell for more and half for less--dropped to its lowest level since 1991.
A county household needed a minimum income of more than $86,300 in February to buy a typical home, compared with $70,000 a year earlier. Continuing a monthly record pace, the median-priced home has risen to $306,000, compared with $272,100 a year earlier.
In Los Angeles, consumers needed an income of $58,300 to purchase a home in February, compared with $50,700 a year ago. Median home prices rose to $206,700 during the month from $197,000 a year earlier.
Elsewhere in Southern California, the percentage of households able to afford median-priced homes dropped year-to-year to 48% from 57% in the Riverside-San Bernardino area and to 35% from 45% in Ventura County.
The lowest percentages were recorded in the Bay Area, where affordability sank to 21% from 33%. The Santa Clara County rate fell to 20% from 33%, and Monterey County slid to 15% from 27%.
The U.S. rate declined to 54% from 57%.
The survey, based on the group’s monthly median home prices, estimates the number of households that could make a 20% down payment and finance a fixed-rate, 30-year mortgage. The group uses monthly median income figures.
