Buying a home in California slipped further out of reach as interest rates climbed and scarce inventory bolstered prices.
Only 16% of households could qualify to purchase a median-priced single-family home in the second quarter, the California Association of Realtors reported Friday. That’s down from 19% in the first quarter and 17% a year earlier.
The state faces an affordability crisis that threatens to hamper growth in the economy and population. People and companies have left California, or chosen not to move there, because housing is so much more expensive than in most of the US.
“In the long run — three or four years — we’ll see tight supply and lower affordability will trim the competitiveness of California if nothing is done to increase the supply of housing,” Oscar Wei, deputy chief economist for the state Realtors group, said in an interview.
Nationally, more than a third of households could afford to purchase a $402,600 median-priced home, according to the report.
For an existing single-family home at California’s median price of $830,620, buyers in the second quarter needed a minimum annual income of $208,000 to qualify for a 30-year mortgage after a 20% down payment. Loans on condos and townhouses, with a median $640,000 price, required a minimum $160,400 income.
Single-family home prices statewide fell 2.4% in the year through June, but buyers’ monthly costs jumped as mortgage rates rose, hovering close to 7%.
Owners with lower-rate loans are staying put rather than selling, limiting for-sale inventory. The number of new listings in June fell 29% from a year earlier, data from the Realtors group show.
Statewide affordability rates were at an all-time low in 2007 — at just 11% — when loose lending policies fueled a housing price bubble.