Real Estate Marketing & Beyond
While increasing home prices are encouraging for homeowners and sellers, a rising number of Californians are unable to join the ranks of homeowners as prices continue to fall out of reach, according to the California Association of Realtors.
Just 32 percent of Californians could afford a median-priced, existing single family home in California during the third quarter of 2013 — the lowest percentage since the third quarter of 2008. The percentage reached 49 percent in the third quarter of 2012, then fell to 36 percent in the first quarter of 2013.
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So just how much earning power does it take to buy the median-priced home of $433,940? A homebuying family will need to make at least $89,170 a year to qualify to buy. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,230, assuming a 20 percent down payment and an effective composite interest rate of 4.36 percent.
A year ago $65,828 would have been needed to buy the median-priced home of $339,930, the CAR said. The association says the dip is due to the low number of homes being sold combined with the high demand, ultimately driving up home prices.
San Bernardino County ranked as the most affordable county with 64 percent able to buy the median-priced home. The least-affordable was San Mateo County with a dismal ranking of 15 percent affordability.
The steepest declines over the past year were experienced in Sacramento, Monterey, and Sonoma counties, all realizing decreases in the double-digits. San Mateo, Marin, and San Francisco counties experienced the smallest year-to-year declines.
On the national front, the median existing-home price for all of 2013 is expected to end the year at $197,000, an annual increase of just over 11 percent, according to the National Association of Realtors.
The NAR says home prices are expected to continue to rise into next year. And while home prices have gone up 18 percent over the past two years, incomes have risen just 2 to 4 percent, according to Lawrence Yun, chief economist of NAR.
Yun said rising mortgage interest rates and investment buyers add fuel to the challenges home buyers face. Some 30 percent of buyers over the past four years have been all-cash buyers.
“We’ve come off of record high housing affordability conditions in the past year, and are now at a five-year low, but conditions are still the fifth best in the past 40 years,” Yun said. “While the median-income family in many areas will still be well positioned to buy a home in 2014, income is barely budging given growth in consumer prices.”
