Is Housing Affordability Really Getting Out Of Reach?…
This has been the hot topic, and for good reason, as housing is the steam engine, arguably, for the southern California economy. Construction is certainly part of that, and permit filings must increase to keep up with housing demands.
Until that truly happens, the burden does fall on the listing inventory of existing houses and condos. As home prices continue to increase because of the tightness in the market, affordability has shrunk from 30% six months ago to approximately 21% now, according to the California Association of Realtors, also known as CAR. The same report has indicated that an annual income of $154,120 is needed to purchase a median priced So Cal home. However, as the new home median price soars above $700,000 as reported last month, the burden for the prospective buyer may still land in the resale market, presenting even more stress upon limited inventory. However, at the height of the market, just before the great recessionary crash, affordability was a paltry 10%. Los Angeles is a little better with affordability at 29%, down from a post crash high of 51%. Wages actually have risen and risen rather substantially, but the lurking unknown is whether inflation will re-emerge as a result. So what is a seller to do? A seller should always do what is in their best interest to do, regardless of the market.
Economic conditions set prices, and always have. A home will sell for whatever a particular buyer is willing to pay. If there is a lender involved, and most of the time there is, then that home must also appraise. What is a buyer to do? What is your primary reason for buying a home? Purely as an investment? Or as a home for your family to live in, grow in and save memories. You have to do that somewhere and you have to pay someone. Might as well pay yourself by growing equity as you repay a fixed rate loan, with still killer rates available.