Buying a starting home in Southern California requires $54,000 more income than the US – Orange County Register

Survey Says looks at various rankings and scorecards that assess geographic locations and finds that these grades are best viewed as a mix of artistic interpretation and data.

Buzz: Typical first-time homebuyers in Southern California need to make $54,000 more — or 94% — compared to other Americans looking for a starter home.

Source: My trusty chart’s look at the California Association of Realtors’ First-Time Buyer Affordability Index for the Spring Quarter. This benchmark provides a remarkable window into how financial issues compare in this important part of the housing market.

This index estimates what a starter home costs by adding up the monthly payments required for an apartment priced at 85% of the average price of an existing single-family home. This purchase would be funded with a 10% down payment on an adjustable rate mortgage – including property taxes and insurance.

And “affordable” in this bill means that monthly possession costs no more than 40% of local household income.

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The hypothetical first-time buyer in Southern California needs an income of at least $111,600 to qualify for the $3,720 monthly payment required for a $680,000 residency. And that calculation says just 36% of the region’s households could qualify to buy a starter home in spring 2022 — far fewer than 43% the year before.

Recall that homes in Southern California rose at an 8.5% annual rate in June according to broker math. And average variable lending rates had risen to 4.3% from 2.6%, according to Freddie Mac.

Where are California’s weakest housing markets?

Do you want to know why so few Americans move to California?

A similar first-time home seeker nationwide only needs an income of $57,600 to qualify for a $1,920 payment for a $351,480 residency. That’s why affordability in the US was 58% this spring — but even that was down from 65% last year.

It’s not just Southern California: Across the state, the same home seeker needs an income of $123,300 – $4,110 payment for a $750,860 residency. affordability? 34% spring 2022 vs. 40% a year earlier.

This adds up to a Southern Californian looking for a starter home needing $54,000 more income — 94% — than a typical American. However, it’s a California “bargain” — it requires $11,700, or 9% less income than the statewide norm.

Local details

How the starter home affordability challenge is affecting across the region, by county…

Los Angeles: An income of $115,200 is required to make a $3,840 payment on a $701,800 residency. That’s 7% less wages than in California, but $57,600 or 100% more than in the US. Affordability stood at 33% of households in Spring 2022, up from 39% a year earlier.

Orange: $181,500 required – $6,050 payment for a $1.1 million residency – 47% more salary than California and $123,900 or 215% above US affordability? 24% spring 2022 vs. 32% a year earlier.

River bank: $89,400 required – $2,980 payment on $544,000 residency – 27% less pay compared to California and $31,800 or 55% above US affordability? 43% spring 2022 vs. 51% a year earlier.

San Bernardino: $68,700 required – $2,290 payment at a $419,050 residence – 44% less pay than California and $11,100 or 19% above US affordability? 53% spring 2022 vs. 61% a year earlier.

San Diego: $134,700 required – $4,490 payment for a $820,990 residency – 9% more salary than California and $77,100 or 134% above US affordability? 31% spring 2022 vs. 39% a year earlier.

Ventura: $131,100 required – $4,370 payment at $798,150 residency – 6% more salary than California and $73,500 or 128% above US affordability? 34% spring 2022 vs. 42% a year earlier.

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Call this income gap the price of paradise — or the financially draining result of various problematic housing policies. And novice investors also have to compete with investors, who often pay to snag another income-generating property.

I can offer a little comfort to a first-time home hunter in Southern California. You could look in the Bay Area.

Here, a buyer needs an income of $208,800 to pay $6,960 for a $1.27 million property. That’s $85,500 or 87% more salary compared to Southern California and $151,200 or 263% more than US affordability? Only 28% in spring compared to 34% last year.

Jonathan Lansner is a business columnist for the Southern California News Group. He can be reached at Buying a starting home in Southern California requires $54,000 more income than the US – Orange County Register

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