Home Affordability Slides Further
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The proportion of California households able to afford a median-priced home fell to 16% in July from 19% a year earlier as prices remained sky-high, according to a report released Thursday.
The percentage has been under 20% for the last year and is approaching a record low 14% set in the summer of 1989, according to the California Assn. of Realtors.
The percentage in July was unchanged from June as soaring home prices in California -- among the highest in the United States -- showed no signs of letting up.
In Los Angeles, the proportion of households able to afford a median-priced home fell to a record low of 14%, the report said. That was down from 17% a year earlier and from 15% in June.
The minimum household income needed to buy a median-priced home at $540,900 in California in July was $125,670, based on an average mortgage interest rate of 5.73% and assuming a 20% down payment, the Realtors’ group said.
This compared with the minimum household income of $50,650 needed to buy a home for $218,000, the U.S. median price in July.
The Santa Barbara region and the northern end of the wine country were the least affordable areas in California in July. Fewer than 7% of households in each market were able to afford a median-priced home.
The most affordable region in the state was the high desert in Southern California at about 30%, followed by the area around Sacramento at 20%.
Analysts are divided over whether the rapid gains in California home prices reflect a housing bubble poised to pop or otherwise deflate, or whether prices will continue rising amid the state’s economic recovery from the long high-tech slump.
California’s persistent shortage of housing, its growing population and relatively low long-term mortgage interest rates have propelled housing prices up sharply in recent years, requiring home buyers to increasingly take on interest-only mortgage loans to become homeowners.
A year earlier in California, the minimum household income needed to buy a median-priced home was $109,170, when the median price of a home stood at $461,760 and the prevailing interest rate was 5.93%.
The top 10 least affordable U.S. metropolitan areas for homeownership are in California, with San Francisco at the head of the list, according to a report released last month by the National Housing Conference.
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