News Column

Housing Affordability in California Takes a Hit

November 10, 2013

By Gregory J. Wilcox, Daily News, Los Angeles

Housing Affordability in California takes a Hit

Housing affordability fell for the sixth consecutive quarter -- July through September -- in response to rising home prices and interest rates, a trade group said Thursday.

During the third quarter, 32 percent of home buyers could afford a median priced home costing $433,940, said the Los Angeles-based California Association of Realtors.

That was down from 36 percent in the year's second quarter and from 49 percent in the 2012 third quarter.

Affordable housing prices fell below 35 percent across the state for the first time since the third quarter of 2008, the association said. California housing affordability hit a record high of 56 percent in the first quarter of 2012.

During the third quarter a buyer needed to earn at least $89,170 to purchase a median-priced home with a monthly payment, including taxes and insurance, of $2,230.

It might not be a bad thing, either.

"Right now its quieter than it has been. It (the market) was at a frenzied pace," said Wendy Silver-Hale, former president of the Van Nuys-based Southland Regional Association of Realtors and a Keller Williams agent. "We have more homes on the market and that's caused prices to stabilize. I see it as more of a healthy thing than an unhealthy thing."

Leslie Appleton-Young, the association's vice president and chief economist, said affordability may flatten out during the fourth quarter.

"We typically see a plateauing of housing prices in the fourth quarter as the market velocity goes down and we are seeing home price appreciation slowing," she said.

Prices are still increasing from a year ago but they have been flat since the summer.

Affordability fell across Southern California, too.

In Los Angeles County, affordability of homes fell to 27 percent from 42 percent a year earlier and was down from 37 percent in the second quarter. To purchase a median priced home costing $448,920 a buyer needed to earn $92,250 annually with a monthly payment of $2,310.

Affordability was much higher in the Inland area but still down from the prior quarter and year, the association said.

In San Bernardino County, affordability fell to 64 percent from 77 percent a year ago and it was down from 69 percent in the second quarter. The required income for a median-priced home costing $182,900 was $37,580 and the monthly payment would be $940.

In Riverside County, affordability dropped to 45 percent from 63 percent a year earlier and was down from 49 percent in the second quarter. A buyer would have to earn $60,130 a year to afford a median priced house costing $292,620 with a monthly payment of $1,500 a month.

"Nearly every county experienced a double-digit decline in affordability when compared to last year, reflecting the substantial increase in California home prices on a year-to-year basis," the association said in a statement. Sacramento, Monterey and Sonoma counties experienced the largest year-to-year declines, while San Mateo, Marin, and San Francisco counties experienced the smallest year-to-year declines.

___

(c)2013 the Daily News (Los Angeles)

Visit the Daily News (Los Angeles) at www.dailynews.com

Distributed by MCT Information Services

Original headline: Housing affordability falls across region, California



Source: Daily News (Los Angeles, CA)


Story Tools