Friday, January 13, 2006

Golden State's Platinum Housing

An article from the Los Angeles Daily News reports that housing affordability across California sank an annual 5 percentage points in November and dipped to record lows in seven areas, including Los Angeles County, according to the California Association of Realtors.

In Los Angeles County, the median-priced home cost $575,310 and only about 11% of households could afford it. A California family needed to earn at least $133,390 a year to get a 6.26% loan to buy a median-priced home. That's assuming a 20% down payment.

In the opinion of your host, measures of affordability could prove to be a good indication of where the real estate market is headed. According to this article, the previous record low in affordability was 13%, hit twice in 1989. For those of you who have been around a while, that was just before the housing market took a bad dive in California in the first half of the '90s.

Realtors quoted in the press still refuse to entertain the possibility of price declines:
I think [affordability] is going to deteriorate further. I know we're going to get higher rates, and even though we're seeing slower price appreciation, prices aren't going to drop, at least in my view.


Post a Comment

<< Home