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Big paychecks are nice, but high-priced housing takes big bite

Big paychecks are nice, but high-priced housing takes big bite
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Visalia, Modesto boast largest housing cost-adjusted salaries in state

Bigger is not always better, at least when it comes to cities, housing and paychecks.

Sure, the Bay Area and Southern California boasts some great-paying jobs, but employees — and their families — must also shell out a lot of those dollars for housing. 

In fact, if you want the most bang for your buck in California, check out Visalia and Modesto in the Central Valley, according to a new report by Jed Kolko, chief economist for job site Indeed. Both cities are in the middle of the state, and more than 100 miles east of the much higher-priced coastal regions.

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Half the housing costs help increase income

Kolko crunched the data, comparing housing costs and salaries to determine that Visalia and Modesto are among the best places to live to stretch that hard-earned money in California — and ranked Nos. 4 and 8 nationwide, respectively.

While both cities have lower-paying jobs compared to other regions in the state, the lower-priced housing costs make up for the difference, with basically half of families able to afford a home, according to the California Association of Realtors (CAR).

Visalia’s median household income was $55,000 in 2017, and $59,500 in Modesto, according to the U.S. Census Bureau. The statewide median household income is $67,000.

But Visalia’s median-home price was about $245,000 in July, and $335,000 in Modesto — both are significantly less than the statewide price of $608,000, according to CAR. 

So, when adjusted for housing costs, Visalia families earn about $80,700 per year and $78,400 for those in Modesto, according to Kolko’s data. However, there is definitely something to consider: both cities have poverty rates of about 20%, and chronic jobless rates well above the statewide average. The cities have a big middle class that can afford a home, and a significant percentage of residents either jobless or are the working poor. 

Sacramento salaries stretch far, too

On the flip side, two California communities were among places where housing cost-adjusted salaries stretched the least in the nation — Ventura County at $62,100 and Vallejo-Fairfield at $64,100. The communities finished as the sixth- and 10th-lowest adjusted salaries in the nation, respectively, according to Indeed’s Kolko.

Only the Sacramento region landed in the top 10 (No. 6) among large metro regions nationwide, those with at least 1 million residents. But Sacramento, where housing costs have exceeded salary increases in recent years, has an adjusted income of $73,700 — much less than those south on Highway 99 in Modesto and Visalia, according to Indeed’s Kolko.

Luxury home prices soar in Nevada, slide in California

Deep-pocketed home buyers are holding off buying in California and looking more at Nevada, as federal limits on state and local taxes are taking their toll, according to a Redfin report.

Two of the 10 cities with the largest luxury home price increases were in Nevada, including first-place Paradise, where high-end home prices soared 47% to $1.08 million during the second quarter compared to a year ago. Henderson, a suburb of Las Vegas, had luxury home prices — considered the top 5% of home sales — jump 16.4% to $1.22 million.

“From a tax perspective, Nevada is the best place to live in the contiguous United if you are a high earner,” says Daryl Fairweather, chief economist for Redfin. “Nevada has long been a haven for California retirees looking to keep their tax bill low, but the reduced cap on SALT deductions has made Nevada an even more attractive destination for high-earners.”

Under new federal tax reform, deductions for state and local taxes are  capped at $10,000 per year. California homes assessed at $1 million or more could top the $10,000 threshold. 

Uncle Sam’s new ways has caused the high-end housing market to suffer in high-tax states, such as California, Massachusetts, New Jersey and New York.

California’s high-end home prices aren’t free-falling, but they are struggling. Long Beach’s luxury housing market had the fourth-largest decline in home prices nationwide at 15.3% to $1.57 million. San Jose — arguably the hottest housing market with some of the largest price gains in recent years — had an 8.2% decline in luxury prices to $2.37 million during the April through June period compared to a year ago.

Golden State among the worst places for the ‘golden years’

Breaking news — California is not the best place to retire. Well, at least if you’re the average state resident.

The Golden State’s high housing costs, more than double the national average, and hefty state taxes, are the primary reasons that many of the worst places to retire are in California, according to WalletHub.

Riverside is one of the worst cities in the U.S. to retire. Jon Bilous/Shutterstock

In fact, seven of the 12 worst places to retire are in California, including last-place Stockton (also known as No. 182 on the national list). San Bernardino, Bakersfield, Fresno, Rancho Cucamonga, Riverside and Modesto were also big losers on the national list.

The study compared the cities across 46 key metrics, ranging from cost of living and quality of local health care to retired taxpayer-friendliness, crime rates and availability of recreational activities.

Affordability, activities and health care were among the leading categories where Stockton and other cities in the state tanked. 

Ironically, high-priced San Francisco, where the median-home price is $1.6 million, was the best place to retire in California, largely because of all of the activities, from performing and visual arts to sporting events. San Francisco finished at No. 20, followed by second-place Los Angeles at No. 43.

Florida cities, including first- and second-ranked Orlando and Tampa, earned five of the top 10 spots.

About the author
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 ron@cahomenews.com.

Party like it’s 2009, again

California home prices have definitely rebounded from the dramatic housing downturn during the Great Recession.

Home prices have increased nine of the past 10 years, or a cumulative 66.1% since 2009, according to CoreLogic. A booming economy and near record-low jobless rate have powered the price gains.

Home prices plummeted a combined 36.5% in 2008 and 2009, before bouncing back in recent years, including with double-digit gains in 2013 and 2014.

Arizona, Nevada, Oregon and Washington also enjoyed hefty percentage gains during the past decade, but fell short of the increase in California. 

The California Association of Realtors reports the state’s median-home price has soared from $285,310 in July 2009 to $608,000 in July 2019 — a 113% increase. 

However, CAR and CoreLogic use different data, and the median-home price means half the homes sell for more, the other half for less, which generally yields higher home prices compared to the average home price.

Photo of Palo Alto home by Hank Shiffman/Shutterstock

CalHFA establishes home loan program for Native Americans

Native American consumers looking to buy a house can benefit from a new home loan program through the California Housing Finance Agency (CalHFA).

The U.S. Department of Housing and Urban Development’s Section 184 Indian Home Loan Guarantee Program offers competitive interest and mortgage insurance rates, making homeownership easier — and monthly mortgage payments smaller. 

Native American borrowers can also apply for gift or grant programs, including the Federal Home Loan Bank’s WISH program and tribal assistance funds.

Native American homebuyers can also use combine the Indian Home Loan Guarantee Program with CalHFA’s MyHome of School Teacher and Employee down payment programs.

“We are pleased to be able to offer this opportunity to Native American homebuyers,” says Tia Boatman Patterson, executive director of CalHFA. “Homeownership is a proven way to transfer wealth between generations, and Native Americans — whether on tribal lands or in California as a whole — are underrepresented as homeowners.”

Homebuyers applying for the Indian Home Loan Guarantee Program must complete an education class and counseling before the loan is approved, just like other CalHFA mortgage programs.

“We’re thrilled that CalHFA is now able to extend mortgage loans to the Native American community, says Rob Wiener, executive director of the California Coalition for Rural Housing. “California’s housing programs have long neglected our Native American community. Making it easier for tribal members to buy decent and affordable homes is a concrete way to improve the quality of life and outcomes for Native families.”

There are currently 109 recognized Native American tribes in California, according to the U.S. Census Bureau. About 150,000 residents are considered Native Americans in the state.

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