Home prices outpace wage gains in many regions
By Ron Trujillofirstname.lastname@example.org
Fast-rising home prices and increasing mortgage rates are making affordability a major concern in California, with much of the state’s homes out of reach for the average resident.
San Diego to San Francisco — and many cities in between — were unaffordable for average income families during the second quarter, according to ATTOM Data Solutions. In fact, four of the five most expensive markets in the nation, where would-be buyers need to spend more than their income to purchase, were in California — Marin County (133%), Santa Cruz (125%), Salinas (100%) and San Francisco (97%).
The current affordability rate is at the lowest level since third-quarter 2008, considered the peak of the housing market and the middle of the Great Recession. The three-month period was marked by the banking crisis highlighted by the collapse of Lehman Brothers on Sept. 15, 2008.
“Slowing home price appreciation in the second quarter was not enough to counteract an 11% increase in mortgage rates compared to a year ago, resulting in the worst home affordability we’ve seen in nearly 10 years, says Daren Blomquist, senior vice president at ATTOM Data Solutions. “Meanwhile, home price appreciation continued to outpace wage growth, speeding up the affordability treadmill for prospective homebuyers even without the rise in mortgage rates.”
Just a few examples of fast-rising home prices outpacing wages in California — San Francisco earnings increased 7.3% during the past year, but home prices jumped 12%; Los Angeles earnings improved 5.1%, but home prices increased 7%, and earnings inched up 2.8% in San Diego while home prices rose 6.1%.
There are a few regions in the state where the average resident can still afford a home, most notably Orange County. The Central Valley — Bakersfield to Madera — also remains affordable for the average worker. And middle-income households in the Northern California cities of Chico, Eureka and Redding can still dream of owning a home.
Otherwise, the chance of homeownership dims in much of the Golden State.
Feature photo of Santa Monica bungalow by Divanov/Shutterstock. Photo of Simi Valley homes by Joseph Sohm/Shutterstock
Best beach cities in the state
California boasts some of the best beaches in the nation, but buying a home close to the sand and surf is tough.
Two of the nation’s top 10 beaches are in the state — and six of the top 20, according to a new report by WalletHub. The online site, best-known for consumer information, crunched the data on affordability, weather, safety and the economy to come up with its list.
Mill Valley in the Bay Area finished in fourth place, with Santa Monica landing at No. 6.
How other California beach cities fared on the national list:
San Clemente (20)
California’s high cost greatly affected how cities ranked. For example, Newport Beach, Santa Barbara and Santa Cruz finished in 25th through 26th place, respectively. Those three cities are among the priciest housing markets in the state — and nation.
Lahaina, Hawaii, topped the national list, scoring high in affordability, the economy and safety. Florida’s Naples and Sarasota finished in second and third place.
Santa Monica pier photo by Scott Trento/Unsplash