Home-Affordability Rate Dips to 10-Year Low
Higher interest rates and double-digit home appreciation pushed the number of Californians who can afford to buy a median-priced home here to its lowest level in 10 years in January, according to the California Assn. of Realtors. About 33% of the state’s households could afford to purchase a median-priced home in the state in January, down 9% from 42% in January 1999, the survey found. The dip was the largest year-over-year drop in housing affordability in the state since July 1989. Researchers pointed to a jump in interest rates from 6.89% in January 1999 to 7.9% in January 2000 as one of the prime culprits for the record drop. Also to blame is the rapid appreciation of existing homes, with the median price of an existing single family home jumping to $233,950 in January, a 15.7% increase from $202,200 in January 1999. These factors also boosted the minimum income needed to purchase a median-priced home in the state to $65,170 in January, up 25% from $51,870 in January 1999, said Leslie Appleton-Young, an economist with the association.