“Numerology” is an attempt to derive meaning from various measurements of economic and real estate trends.
Buzz: In order to buy the median-priced single-family home in California, a house hunter now needs to come up with a record-high monthly payment of $4,359.
Source: My analysis of the California Association of Realtors statewide homebuying data for July, along with historical data dating back to 1990, was the basis for this finding.
Fuzzy math: Sales of existing, single-family houses have dropped to a 277,000-a-year pace, making it the 13th slowest on record.
Topline: So, how did the California house payment yardstick reach such heights for the second consecutive month?
First, there’s the median selling price of $832,340 in July, which is the eighth highest on record. Although it decreased by 1% from the previous month, it has remained relatively stable over the past 12 months after a significant crash of 18% between May 2022 and February 2023.
Additionally, mortgage rates have skyrocketed to an average of 6.84% for 30-year home loans in July. This is well above the 5.41% rate from a year ago and the 5.96% average since 1990. (It’s worth noting that rates reached a 21-year high of 7.09% on August 17!)
Assuming these current rates, along with a 20% downpayment, buyers would be looking at a estimated monthly payment of $4,359. This is a 1% increase from the previous month, a 17% increase from a year ago, and a staggering 110% increase since February 2020, just before the start of the pandemic.
Furthermore, the assumption of a 20% downpayment means that the hypothetical buyer would need to have $166,000 in cash in order to afford the purchase, which is no small amount.
Details: According to a Realtor affordability index, only 16% of California households could afford to buy a median-priced single-family home in the second quarter. This is why the statewide sales pace is 9% slower than a year ago and 34% below the 34-year average.
Even many current homeowners cannot afford to buy at today’s prices, leading them to stay put and not list their homes for sale. As a result, the statewide supply of homes for sale is at one of its lowest points since 1990, with California listings down 27% from a year ago and 68% below the 34-year average.
It is clear that the most successful buyers are those with deep pockets who are eager to make a quick deal. The average time a listing stays on the market is just 16 days, which is the 32nd lowest level in the past 34 years. This represents an 11% decrease in time on the market from a year ago and a 62% decrease from the average of 42 days since 1990.
Bottom line: The previous record for house payments in California was $3,040 a month, which stood from June 2007 until March 2022, during the peak of the housing bubble. In the pandemic era, new records have been set seven times in the span of 17 months, resulting in a 31% increase in this benchmark for homebuying costs.
The question now is whether prices will remain unaffordable and elevated while sales continue to be slow. Will mortgage rates decrease in order to address the financial imbalance? Or will pricing need to adjust in order to attract house hunters back into the market?
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected].
Don’t miss out! Subscribe to our free ‘Home Stretch’ newsletter by email. Subscribe here!
Note: The original content contains unrelated HTML tags and additional sections that couldn’t be modified.
Denial of responsibility! VigourTimes is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
