Only about one in four Californians can actually afford to buy the average home in the Golden State, according to new data from the California Association of Realtors (CAR). The numbers, the worst affordability figures for Golden State home buyers since the start of the Great Recession, show that the housing crisis is not just affecting the embattled working class.
There aren't enough homes for sale, prices continue to increase, and incomes aren't keeping up with those prices, says CAR senior economist Oscar Wei. "We have a supply shortage issue," he says, "and if we don't correct it by building more housing, affordability will continue to be a problem for the next year or two."
A household income of $112,100 is needed in order to afford a median-priced home in the state, according to the association. That's more than double the Los Angeles County household median income of $56,196 and nearly four times the median individual take of $28,337. "Twenty-eight percent of California households could afford to purchase the $555,680 median-priced home," according to a CAR summary.
The median home price in Greater Los Angeles (including Orange County) is even worse — nearly $600,000, the association states. In L.A. only about 29 percent of households can afford to buy a median-priced home. "Of particular note, housing affordability in Los Angeles County dropped ... as the area’s median home price jumped $81,000 in one quarter to reach nearly $600,000," according to the summary.
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"Home prices have been growing faster than income growth," CAR's Wei says.
A separate analysis from the website Point2 Homes found that L.A. was the fifth most expensive market for home buyers in the nation. That report, which looks only at the city of L.A., puts the local median home price at $628,750 and the median family income at $52,024.
The problem of flat incomes and rising prices is pushing people far outside the city, Wei says. "People who can't afford to buy in L.A. are moving out to San Bernardino and Riverside, increasing traffic" because they're commuting to jobs in Los Angeles proper.
"We're seeing the economy continue to improve," Wei says. "Job growth is improving. The housing demand is there. It creates more upward pressure on price and constraints on the supply."