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California heads to the front of the class, at least when it comes to the most affordable housing markets for teachers in the U.S.
Yep, the Golden State — one of the most expensive housing markets in the nation — is the most affordable, largely because of good-paying school districts in the Central Valley.
Five of the most affordable markets for educators are in California, and seven of the top 15, according to Redfin.
Merced — a city of 90,000 that was one of the hardest-hit housing markets in the nation during the Great Recession — tops the list, with the average teacher earning $99,600 per year while their housing costs are about $35,000 (based on the median price of $277,000). That leaves about $64,000 in disposable income, $10,000 more than second-place Fresno.
Riverside, Modesto and Bakersfield round out the top five, each with about $51,000 in disposable income per year. Of course, all five cities have average home prices much lower than the statewide figure, according to the California Association of Realtors.
A tale of two cities (and high-priced markets)
California also has two of the five most expensive housing markets in the nation, with San Jose the priciest. San Jose teachers earn about $90,000 per year, but their home costs exceed $87,600, leaving less than $3,000 in disposable income per year.
Salinas is the fourth most expensive market, with the average teacher earning $63,700, just slightly more than the annual homeownership costs of $56,700.
Many teachers in San Jose, Salinas and other high-priced housing markets in the state — such as Los Angeles and San Francisco — buy homes in lower-priced regions and commute to work.
Riverside County, including Menifee, is one of the most affordable housing markets for teachers in California — and the U.S. BonandBon/Shutterstock
LA mega-mansion with a one-time price tag of $500 million enters receivership
A Bel Air estate called the “One” that was expected to list for $500 million and become the highest-priced sale in the state has entered receivership, with the hopes of paying off contractors and lenders owed millions of dollars.
The hilltop mega-mansion — which features nine bedrooms, multiple kitchens, a nightclub, a four-lane bowling alley, 40-seat theater, a gym and running track, and an underground garage for as many as 50 vehicles — will be listed at a much lower price in the next few months, according to court documents in Los Angeles Superior Court. The 8-acre estate also includes four pools and a moat that surrounds the 105,000-square-foot home.
Developer Nile Niami, who has built several other high-profile estates in Los Angeles, has boasted a $500 million price for “The One” during numerous interviews the past few years. But construction delays and funding challenges have plagued the project.
From a half-billion-dollar brag to the bargain bin
CNBC reports Niami has borrowed more than $165 million for the Los Angeles-area mansion. It’s uncertain how much Niami owes contractors and lenders.
Ted Lanes of Lanes Management has been appointed as the receiver and will oversee the completion of “The One.” Proceeds will be used to pay off the debt. Lanes referenced a listing price of $288 million — a 40%-plus discount from the original price tag — though the final price will be determined later.
Amazon founder and chairman Jeff Bezos paid $165 million for the former Warner estate in Beverly Hills in 2020, the most expensive home sold in Los Angeles.
Rents returning to pre-pandemic norms
Covid flipped apartment rents upside down during the past 18 months in California, but big-city rents are starting to recover while midsize market growth is slowing.
Californians are beginning to return to cities, from San Diego to San Francisco, after many fled for the suburbs during the first several months of the pandemic.
The average rent for a one-bedroom apartment in San Francisco inched up 2.9% to $2,800 in August, though still down 7.9% from a year ago. But the month-over-month increase helps offset the 20%-plus decline during the first half of 2020, according to Zumper.
One-bedroom apartments in San Jose and Los Angeles also had a modest increase in August compared to the previous month — and are only off about 1.5% from a year ago (see rents in the chart below).
There is definitely a big difference between Oakland and San Diego. The average rent is down 9.1% in Oakland, while San Diego rent is up 11.1%. San Diego, as mentioned in the next blog item, has enjoyed a healthy interest during the past several months.
Central Valley cities Fresno and Bakersfield boasted double-digit growth during the pandemic. But more modest single-digit year-over-year gains are returning.
Half of California renters are ‘cost-burdened’
Nationwide rents are surging past pre-pandemic estimates, with a record 9.2% increase in July compared to a year ago, according to Zillow. The average rent is $1,840 based on the 50 largest U.S. markets.
At the current pace of rent increases, the average renter in the U.S. will be “cost-burdened” by the end of the year, spending at least 30% on housing.
In California, the percentage is much higher, with 53% of renters considered cost-burdened. The average renter in the state needs to earn at least $39 per hour — about $81,000 per year — to afford a two-bedroom apartment and stay below the 30% threshold, according to the National Low Income Housing Coalition.
One-bedroom apartment rent in August compared to a year ago
- San Francisco: $2,800, down 7.9%
- San Jose: $2,200, down 1.3%
- Los Angeles: $2,050, down 1.4%
- Oakland: $2,000, down 9.1%
- San Diego: $2,000, up 11.1%
- Santa Ana: $1,830, up 7.6%
- Anaheim: $1,760, up 6.7%
- Sacramento: $1,490, up 6.4%
- Fresno: $1,100, up 0.9%
- Bakersfield: $900, up 5.9%
San Diego home prices soar in June
San Diego was one of the nation’s hottest housing markets in June, with a 27.1% price increase compared to a year ago, according to a closely watched monthly report.
The beach city — the second-largest in California with 1.4 million residents — finished in second-place behind Phoenix, which had a 29.3% year-over-year price increase, according to the S&P CoreLogic Case-Shiller Indices.
The monthly report, considered one of the best measures of the housing market, reported a record 18.6% increase in home prices nationwide during the past year, a significant jump from the 16.8% in May — and evidence that goes against other data indicating a market taking a breather.
The Case-Shiller report is more a snapshot of the market; only three California cities are listed — Los Angeles (up 18.9%), San Francisco (up 21.9%) and San Diego. All three cities reached a record price in June.
But how long that growth continues is uncertain.
“We have previously suggested that the strength in the U.S. housing market is being driven in part by the reaction to the Covid pandemic, as potential buyers move from urban apartments to suburban homes,” says Craig Lazzara, managing director and global head of index investment strategy for S&P DJI. “June’s data are consistent with this hypothesis. This demand surge may simply represent an acceleration of purchases that would have occurred anyway over the next several years.”
The California Association of Realtors reported similar data, with the state’s median home price up 21.7% in July compared to a year ago. However, month-to-month prices and sales slipped for the third straight month in July.
Longtime business journalist-turned-communications executive who enjoys reporting on residential real estate in his spare time.