High home prices are bad medicine for RNs looking to buy
Bay Area RNs would need to save 10 years of paychecks to buy a home
Registered nurses earn a pretty penny in California, but they need many shiny dimes in order to buy the median-priced home in the Bay Area and Los Angeles.
The average registered nurse would need to work and save 10.2 years of pay in order to purchase a home in San Francisco, easily the longest work-to-purchase ratio among 12 major metros in the U.S., according to PropertyShark. Los Angeles had the second-largest work-to-purchase ratio at 7.1 years, followed close behind by third-place New York City (7.0 years).
You can drill a few holes in the report — mortgage rates are near record-lows and a small down payment can open the door to ownership — but there are a couple of hard-to-overlook facts: home price increases outpaced wage growth for nurses in the Bay Area and Los Angeles, and saving money for a down payment takes time. In these cities, a lot of time.
Price increases outpace wage gains
The average nurse earned $129,000 in San Francisco in 2018, but the average home in the City by the Bay soared $136,000. With a current median-home price of $1.35 million, saving even 10% for the down payment would require more than a year’s salary.
Los Angeles-area home prices increased $41,000 to $711,000 in 2018, easily outpacing the wage gains of the average RN pay of about $100,000 in the region.
Now, home price increases have slowed during the past several months, but even a 5% annual gain makes homeownership tough based on a registered nurse’s salary.
Of course, RNs can always find more affordable homes in the suburbs of Los Angeles, such as the Inland Empire or Lancaster-Palmdale area, or buy a home with their spouse or even a friend. But the PropertyShark report definitely identifies the critical challenge of even the highly educated and well-paid in the Bay Area and Southern California.
Photo of registered nurse with a patient by Ohlone College/Flickr
Home-flipping soars to record-high in Q1, but profit tumbles to 3-year low
You’ve seen the programs on HGTV and DIY, where a couple buys a fixer-upper, pays for an extensive renovation and turns a nifty profit in a matter of months.
Well, those days may be coming to an end.
Home-flipping accounted for 7.2% of sales nationwide during the first quarter, the largest percentage since first-quarter 2010, according to ATTOM Data Solutions.
But the average flipped home — those bought and sold within a year — only netted sellers about $60,000, the smallest profit since first-quarter 2016. And the average return on investment was 38.7%, the lowest percentage since third-quarter 2011.
If the head-turning gains continue to slow, home-flipping may become less common as get-rich-quick dreams are doused by economic reality.
The primary reason is fast-rising home prices in recent years have slowed, while renovation costs have soared, greatly affecting the profit margin on fixer-uppers, according to ATTOM Data.
“With interest rates dropping and home price increases starting to ease, investors may be getting our while the getting is good, before the market softens further,” says Todd Teta, chief product officer at ATTOM Data in Irvine. “While the home flipping rate is increasing, gross profits and ROI (return on investment) are starting to weaken and the number of investors that are flipping is down 11% from last year. Therefore, if investors are seeing profit margins drop, they may be acting now and selling before price increases drop even more.”
California had few markets that cracked the closely watched report, except for Kings County (Hanford-Lemoore), where flipped homes accounted for 48% of home sales during the first quarter, easily the largest percentage in the nation.
About the author
Ron Trujillo, an award-winning business journalist-turned-public relations executive, is the editor-owner of CalHomeNews and can be reached at email@example.com.
California equity gain slows dramatically in Q1
California’s one-time red-hot home-price gains are definitely cooling off, as record-high home prices may have reached their peak, according to a new report.
The average California homeowner — from Redding to San Diego, and everywhere in between — enjoyed a $4,000 increase in equity during first-quarter 2019 compared to a year ago, according to CoreLogic. The figure is easily the lowest in recent quarters, and below the national average of $6,400 during the same period.
Nevada and Idaho had the largest equity price gains at $21,000 during the past year, followed by Wyoming at $20,000. Utah had the third-largest increase at $19,000. Nevada, Idaho and Utah have become popular destinations for Californians looking for more affordable housing markets.
Several often-overlooked states, at least when it comes to home-price gains, reported larger increases than California, including Kansas at $8,000, and Nebraska and Montana at $7,000.
Despite the slowdown in equity gains, most California homeowners are in good shape when it comes to their mortgage –only 2.3% are dealing with negative equity, where they owe more than the current value of their home, according to CoreLogic.
Only 0.7% of homeowners with a mortgage in San Francisco are underwater, the lowest percentage in the nation. Los Angeles is also among the lowest at 1.5%.
House in central California by Richard Thornton/Shutterstock