Compare Listings

Renting, Affordability and Interest

[dropcap]W[/dropcap]ith affordability deteriorating alongside rising prices and essentially flat sales for several years, fewer Californians have been able to make the jump back into owning their own homes.

The number of homeowners in the state rebounded from 7.12 million households in 2014 to 7.56 million in 2016. However, the renter population has increased by more than the uptick in homeownership. The California Association of Realtors estimates that homeownership increased by a net of 87,865 in 2016. The number of renter households increased by more than 108,000.

Affordability in California is well below the national average. Only 31% of households can afford the median-priced home here compared with 58% nationwide. Interest rates are also expected to rise, which will increase the cost of carrying the typical mortgage. This would reduce affordability that much more. In addition, the supply constraints have created an excess-demand situation that is putting further upward pressure on home prices as the economy creates more jobs and incomes start to rise.

Home Prices

CAR is currently forecasting that home prices will continue to rise this year, growing by a projected 4.6%. That would bring the median price of a single-family home to $525,400.

At a 4.5% rate for a fixed-rate mortgage, that would raise the minimum qualifying income for that median home to roughly $114,000. That’s an income level that just over 25% of California’s households currently earn.

As such, affordability and homeownership might get worse before they get better.

Facebook Comments
img

Lex Shan

Lex is a real estate broker, real estate developer, entrepreneur and technologist. He has started an architectural design firm, real estate development private equity fund and California's largest real estate 3D marketing company.

    Related posts

    Why is Spring the best season for buying a home?

    The best season for real estate Spring is often considered the best season for homebuyers. In...

    Continue reading
    Lex Shan
    by Lex Shan

    Perks Of Hanging Your License With The Cal Agents

    A demanding career choice As a career choice, real estate is very demanding. Not only do you have...

    Continue reading
    Lex Shan
    by Lex Shan

    California Wants You To Become A Homeowner! And There Are Many First-Time Buyer Programs To Help You.

    A massive challenge for every Californian Californians have a huge challenge when they want to...

    Continue reading
    Lex Shan
    by Lex Shan

    Join The Discussion

    5 Secrets to Sell Your Home for $30k to $100k More

    Only top 1% real estate agents are using these techniques to sell homes. Today they are available to you too!

    • Proven techniques
    • Not Available Elsewhere
    • Act On Them Today
    Sign up to learn the secrets!
    x