REAL ESTATE: It’s getting tougher to buy a house
Inland Southern California has pushed past the affordability level that allows median income households to buy a house, a new report from RealtyTrac suggests.
Home prices jumped 26 percent year-over-year in Riverside County over the last quarter of 2013, putting the median at $236,667, a gain that was good for home sellers but pinched the pocketbook of many middle-income wage earners here.
At that price, home buyers would have to make more than $54,096 to qualify for a three-bedroom home that would require a minimum $1,127 monthly to pay the mortgage, insurance, taxes and maintenance.
Riverside County’s median income per household was $52,621 in late 2013, some $1,500 short of the required minimum.
Daren Blomquist, vice president of Irvine-based RealtyTrac, a real estate information service, says the gap was created from a potent brew of rapidly rising home prices and the often-overlooked but significant uptick in interest rates.
The monthly cost of owning a home is still less than renting in most markets, he said, but noted that the cost to finance homeownership is getting “dangerously disconnected” with still-stagnant median incomes.
Only one year earlier, home buyers needed to make only $38,982 to qualify for a home. The median price in late 2012 was $188,138.
Riverside County is not alone.
RealtyTrac’s housing affordability analysis on 325 counties across the nation says the estimated monthly house payment for a median priced home purchased in the fourth quarter of 2013 increased 21 percent on average from one year ago.
Wage earners in neighboring counties are also likely to be feeling the squeeze.
The minimum qualifying income to buy a median-priced home in Los Angeles County is now more than $95,000, up from $68,000 one year ago, the analysis found.
In Orange County, the 21 percent price gain to push the median price of a home in late 2013 up to $514,333 means one needed a minimum income of $117,560 to qualify for a mortgage, up from $88,198 the year earlier. The minimum qualifying income to buy a median-priced home in San Diego County is $93,142; some $32,000 more than the median household income.
For San Bernardino County home shoppers and buyers, the scene is mixed.
Home prices rose 29 percent year to year from $154,000 to $199,167, and so have the monthly payments. But the median price home that now costs $948 on average per month to own — it was $665 the year earlier — is still falling into the affordable category for wage earners there.
The household median is $50,770. At these price points, one must make a minimum of $45,523 to meet income qualification standards.
If you’re shopping for a home there, home buyers will have to move fast. It takes only 36 days on average to sell a San Bernardino County house, four days less than the year earlier. In Riverside County, the selling day average is nearly 45.
The California Association of Realtors, in its January report, said the underlying fundamentals for housing demand exists, but crimped inventory continues to hold back a stronger recovery.
That, and, affordability is becoming an issue for homeowners who now are reluctant to move because of rising mortgage rates and more restrictive lending standards.
Kevin Brown, president of the trade group, noted that supply conditions in lower-priced segments have been especially tight because inventory on homes listed below $300,000 fell 13 percent from January 2012. This shook out as $1 million existing home sales grew 11 percent across the state.
With these dynamics taking shape, the next few months bear watching and beg the question: Is the teeter-totter type recovery getting ready to flatten out? Or, are we at the threshold of another price run-up?