California housing affordability declines as home prices rise | Katonah NY Homes

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California’s post-recession moment for housing affordability appears to be ending fast.
Rising home prices in the San Francisco Bay Area and other coastal markets shut out a big chunk of the state’s home-buying population last quarter, according to data published Monday by the California Assn. of Realtors. Rising mortgage interest rates also didn’t help.
The rise in mortgage costs will probably keep values from skyrocketing, but price appreciation will probably continue, said Leslie Appleton-Young, chief economist for the association. That means housing affordability probably won’t improve any time soon.
“It is going to continue to deteriorate, but perhaps at a lower rate,” Appleton-Young said. “I do think you are going to see a cooling off of price appreciation.”
Thirty-six percent of Californians could afford a single-family home at the state’s median price in the second quarter, down from 44% in the first quarter, according to the association’s housing affordability index. The state hit a record high for affordability in the first quarter of 2012, with 56% of home buyers able to buy a median-priced home.
People looking to buy a house needed to earn a minimum of $79,910 a year to qualify for a home at the statewide median price of $415,770 in the second quarter. In the prior quarter, a minimum annual income of $66,800 was needed to qualify for a home at the median home price of $350,490.
Richard Green, director of USC’s Lusk Center for Real Estate, said the decline in affordability is just the latest indication of wage stagnation in the U.S. In the post-World War II boom, home prices and wages rose in sync, making homeownership increasingly accessible, but that ended in the 1970s.



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