California real estate: The income you need to buy a home has doubled over the last five years

The annual income required to buy a median-priced home in California has more than doubled over the last five years.

That striking bit of news comes from a report by the California Association of Realtors. In the second quarter of 2017, it says, buyers needed a minimum annual income of $110,890 to qualify for a single family home priced at $553,260, the statewide median. Compare that to the first quarter of 2012, when a minimum income of $56,320 was needed to purchase a home priced at $279,190, which was the median at the time.

The situation has grown even more dire in the nine-county Bay Area where a minimum income of $90,370 was needed five years ago to purchase a median-priced home of $447,970. Today, the minimum required income has climbed to $179,390 while the median price has ratcheted up to $895,000 for the region. But while that $179,390 might get you something in Alameda County (where the median home price is $880,000) or Solano County ($412,000), it’s not so likely to get you anything in San Francisco ($1,450,000), San Mateo County ($1,469,000) or Santa Clara County ($1,183,440).

The report shows that affordability is hard to come by throughout the state. The monthly payment on a median-priced, single family home in California, including taxes and insurance on a 30-year fixed-rate loan, was $2,770 in the second quarter, assuming a 20 percent down payment and an effective composite interest rate of 4.09 percent.

The second-quarter report adds that 29 percent of California households could afford to buy a $553,260 median-priced home — down from 32 percent in the first quarter and also down from 31 percent in the second quarter of 2016. The percentage of buyers able to swing a deal for condos and townhomes was higher — 38 percent — as those homes have a lower median price of $443,400. An annual income of $88,870 was needed to make the monthly mortgage bill of $2,220.

The state’s least affordable counties were San Francisco (where only 12 percent of buyers could afford a median-priced, single family home), San Mateo (14 percent) and Santa Barbara (16 percent), followed by Marin, Santa Clara and Santa Cruz (all 17 percent). In Alameda County, 19 percent of buyers could afford a median-priced home, compared with 31 percent in Contra Costa County.

The state’s most affordable counties were Tehama (57 percent), Kern (54 percent), Sutter (53 percent) and Kings and Tulare (52 percent).

Top: Photo of a “sale pending” sign outside a house in Palo Alto, Calif. (AP Photo/Paul Sakuma)

 

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  • hoapres

    This is what happens when : 1. The Chinese come over and buy up SV with pieces of paper called US dollars and 2. The tech industry allowed to bring in cheap foreign labor called h1bs.

    If that sounds simplistic then well it is because it is that simple.

    What I don’t understand is that I am banned (apparently) on the regular SJMN website but not here.

    That doesn’t make sense to me.

    • Mark

      Still peddling that Chinese with money nonsense? Its the H-1Bs that are buying, and the Indian landlord families, using credit from local sources.

      • hoapres

        Nope

        Records don’t lie.

        Records show the surname being Chinese paying with ALL CASH.

        Clearly not every property in Silicon Valley is being sold that way but for houses ALL CASH offers are becoming more the rule than the exception.

        • Mark

          Records do not show any of such to any degree of statistical relevance. Records show a lot of highly leveraged purchases being made by US citizens, in addition to the all-cash purchases that would be typical when someone sells a paid-up existing property and moves.

          Its actually a tactic of the Indian property hoarders/speculators, to cast blame on groups like “Chinese”, to deflect from their own speculative activity. A lot of that up and down the coasts. Of course, they benefit strongly from the H-1B influx.

          • hoapres

            Nope

            Got it wrong.

            I visit the Santa Clara county records office so on this I really do know what I am talking about.

          • Mark

            Right… You’re most likely just pushing an agenda, or someone else is and you’re parroting. The “Chinese with money” myth is rather easy to debunk if you actually go look at the records.

            Its actually a tactic of the Indian property hoarders/speculators, to cast blame on groups like “Chinese”, to deflect from their own speculative activity. A lot of that up and down the West coast. Of course, they benefit strongly from the H-1B influx.

          • hoapres

            I look at them and you don’t.

            While I doubt that you have ever done a title search, if you are right then we are likely in a real estate bubble that crashes in the near future. If I am right then real estate prices don’t crash at least for residential properties as an all cash buyer can ride out an economic storm.

            I don’t see housing prices in Silicon Valley dropping anytime soon.

          • Mark

            Other than those who moved and sold a property (the most typical “all-cash” scenario), there are very few transactants that aren’t using very large mortgages in the SV. So in a crash they’re highly vulnerable. Just as in the early 2000s. Because there’s so much credit involved for the vast majority of buyers, SV RE is highly correlated to the SV economy, and will crash along with it. If Trump banned H-1B, large numbers of housing units held by Indian landlord-family speculators would be shaken loose.

          • hoapres

            Sigh

            Got that wrong.

            You need to spend some time down on Hedding Street and get an education.

          • Mark

            Not sure why you’re pushing an agenda. Chinese (ie: real Chinese, not just US citizens of Chinese ethnicity) are not meaningful participants in the SV or even West Coast RE marketplace.

          • hoapres

            Translation

            I have never done a title search.

            OK, I got it.

            Do your homework, next time please. 🙂

          • Mark

            Translation: I am just pushing an agenda, being suckered in by the Indian landlord family property hoarders to blame “Chinese”. When the real problem is Indian-ethnicity landlord families hoarding and bidding up property to rent to H-1Bs.

          • hoapres

            Your kidding.

            If I am pushing an agenda then this is hardly the place for it.

            Hard as it might to believe, I hope you are right but the records are what the records are.

          • hoapres

            >> Because there’s so much credit involved for the vast majority of buyers, SV RE is highly correlated to the SV economy, and will crash along with it <<

            We soon find out.

            If you are right then it crashes. If I am right then it doesn't.

            If that sounds simple then well it is because it is that simple.

          • Mark

            Fair enough. Can’t happen soon enough, BTW.

          • hoapres

            Actually, I hope you are right but it sure doesn’t look that way but we find out soon enough.

          • Mark

            With Asians being 40% (and most likely closer to 90% in actual SV-located tech roles) in the major tech companies these days, its only logical that they’re going to be the most influential driving force in the marketplace.

            http://www.visualcapitalist.com/visualizing-diversity-tech-industry/

            Is it any wonder why the Silicon Valley completely lacks nightlife, or even reasonable options to get a burger and a beer when my plane gets delayed coming into SJC after dark? LOL!

          • hoapres

            I have and you haven’t.

          • hoapres

            Not in Silicon Valley.

            You don’t see many highly leverage real estate purchases for residential properties. Long gone are the days of under 20% down payment mortgages.

          • hoapres

            >> in addition to the all-cash purchases that would be typical when someone sells a paid-up existing property and moves. <<

            Unless it is a simultaneous close, it doesn't work that way.

            Really it doesn't.

  • omegatalon

    This is a good thing as it means property value has increased and buying real estate is a good investment as it means if 20 years time, a person who owns their own home in California can sell then relocate with lots of cash.

    • hoapres

      That’s what is happening.

 
 
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