Housing affordability has hit a 10-year low throughout most of California, new data show, as three out of four state residents can no longer afford sky-high median homes prices. Buyers in the capital region are feeling similar pressure.
The percentage of people able to afford an average-price home dropped sharply from 31 percent at the start of 2018 to 26 percent by midyear, the lowest level since 2008, according to an analysis by the California Association of Realtors.
That state median single-family home price hit $597,000 during the April-to-June time period this year.
Similarly, in Sacramento County, affordability hit a decade-long low. Forty-one percent of potential buyers can now afford a $374,000 home here, the spring quarter median-price for homes sold in June. That’s far lower than the 2012 peak of 74 percent.
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A potential Sacramento buyer must earn $79,000 a year to buy a median-priced house, and would be required to spend $1,980 a month on mortgage, tax and insurance, according to the state Realtor group assessment. That’s based on a 30-year, fixed-rate loan, with a 20 percent down payment and a 4.7 percent mortgage interest rate.
That continues to be a much better scenario, though, than in the Bay Area, where only 18 percent can afford the $1 million median-price sales tag. In San Francisco, only 14 percent of residents can buy.
Santa Cruz County, though, was toughest in the state. Only 12 percent of people living there can afford the county’s median home price, $900,000. Rural Lassen County was at the opposite end of the spectrum. Sixty-four percent of residents there could afford that area’s $192,500 median home price.
The data show that affordability levels have seen historic gyrations in the past decade.
With home prices artificially inflated in the mid-2000s, few Californians — only 11 percent — could afford to buy anymore. The housing crash, though, dropped prices dramatically, and by 2011, 56 percent of the state’s residents could afford to buy.
Affordability dropped throughout the Sacramento four-county region this year:
▪ Placer County, from 44 percent to 41 percent
▪ El Dorado County, from 42 percent to 38 percent
▪ Yolo County, from 41 to 33 percent
Recent sales data for June show that housing price escalation has begun to level off in the state, as slightly fewer homes sold. But even as prices level, rising mortgage rates continue to have an impact on the average person’s ability to buy, real estate watchers say.
“The lackluster spring homebuying season could be a sign of waning buyer interest as endlessly rising home prices and buyer fatigue adversely affected pent-up demand,” Realtor association President Steve White said in a news statement last month.