We all know that home-prices have remained flat throughout the year, but the run-ups of 2013 have left the bar at its highest point in years, creating issues of affordability nationwide. This problem is only intensified in California though, as prices remain exceedingly high for a handful of markets throughout the Golden State, putting home ownership out of reach for a growing number of would-be buyers on the west coast.
According to a new report from the National Association of Realtors, which measured the median price of homes sold in the second quarter, five of California’s largest markets are among the top 10 most expensive housing markets in the country.
San Jose, where the median existing single-family price was $899,500, took the first spot in this category, followed closely by San Francisco, Orange County, San Diego and Los Angeles, where median prices reached $769,600, $691,900, $504,200 and $420,300 respectively.
Even the relatively inexpensive Inland Empire sat 21st on the list— pricier than Miami; Austin, Texas; or Chicago — with a median of $274,600.
Prices rose more slowly compared with last year in most U.S. housing markets, the report said. But prices are now well above levels of the last few years. That has put home buying out of reach for growing numbers of households, especially in high-cost markets.
Qualifying for a mortgage on a median-priced home in Orange County with a 20% down payment would require household income of $131,168, the report estimates; with 5% down, it would require $155,762.
In metro Los Angeles, a median-priced home would require $79,679 in household income to qualify at 20% down, and $94,619 at 5% down.
While this may seem reasonable to some, these statistics should raise concern considering the median household income in Orange County is $75,566, according to the Census Bureau. In Los Angeles County it is $56,241.
Do you think this affordability crisis stems from overpriced homes or a lack of household income? What needs to change before affordability eases? We’d love to hear your thoughts!
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