Prices Up, Sales Down for Southern California Homes
Prices Up, Sales Down for Southern California Homes
With home prices up, why are sales down? It is getting increasingly difficult to afford Southern California homes or condos. Even with very low interest rates, the number of sales are down. With home prices increasing steadily in the last several years, many buyers have snatched up homes in the lower price ranges. In July, Los Angeles home sales dropped 17.7%. This is being attributed to low inventories in modest price ranges and challenging affordability.
Housing Affordability
Another way to look at the equation: Can people afford the monthly mortgage required to purchase coastal real estate. The California Association of Realtors (CAR) released compelling information last month. Working people do not make enough income to keep up with the rising prices. It seems that homebuyers just don’t want to be house poor. The median sales price for a home in Los Angeles increased $23,340 year over year.
A CAR report in August 2016r raises eyebrows. All six Southern California regions recorded lower affordability numbers. It is no surprise that real estate in the Los Angeles coastal areas and the San Mateo, Santa Cruz, and San Francisco counties register as least affordable with relation to income.
Looking at the Housing Affordability Index, Median Home Price, Monthly Payment including Taxes & Insurance, and Minimum Qualifying Income, we find these local stats:
- Los Angeles Metro: 33, $470,330, $2305, $92,219
- Los Angeles: 30, $480,040, $2353, $94,123
- Orange County: 22, $742,220, $3638, $145,530
- Santa Barbara: 20, $703,460, $3448, $137,930
In all of California, only 31 percent of home buyers could afford to purchase a median-priced ($516,220) existing single-family home. This party would need an annual minimum income of $101,217. The example is based on monthly payments of $2,530 on a 30-year fixed mortgage at 3.85 percent interest. But 40 percent of buyers could afford a median-priced condo or townhome ($411,390) and its $2,017 monthly payment. The minimum income required would be $80,663.
California Association of Realtors
The California Association of Realtors was established in the early 1900s. It is one of the largest trade organizations in the United States. The 185,000 members of CAR are dedicated to professionalism in real estate. The organization is headquartered in Los Angeles.
Real Estate Agents Southern California
For information about Southern California homes for sale, please call Bob Cumming of Keystone Group Properties at 310-496-8122.
