Thursday, September 08, 2005


Record-Low Affordability in LA

The California Association of Realtors has released its monthly Housing Affordability Index for July. The index indicates what percentage of households can afford to purchase a median-priced, single-family home. That price was $543,890 in Los Angeles for July 2005. And the index says that only 14 percent of LA households could afford it. That's an all-time low for the city. It was at 15 percent in June and 17 percent in July '04.

Here's the CAR release:
LOS ANGELES (Sept. 8) – The percentage of households in California able to afford a median-priced home stood at 16 percent in July, a 3 percentage-point decrease compared with the same period a year ago when the Index was at 19 percent, according to a report released today by the California Association of REALTORS® (C.A.R.). The July Housing Affordability Index (HAI) was unchanged from June, when it also stood at 16 percent.

C.A.R.’s monthly housing affordability index measures the percentage of households that can afford to purchase a median-priced home in California. C.A.R. also reports housing affordability indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being in the state.

The minimum household income needed to purchase a median-priced home at $540,900 in California in July was $125,670, based on an average effective mortgage interest rate of 5.73 percent and assuming a 20 percent downpayment. The minimum household income needed to purchase a median-priced home was up from $109,170 in July 2004, when the median price of a home was $461,760 and the prevailing interest rate was 5.93 percent.

The minimum household income needed to purchase a median-priced home at $218,000 in the U.S. in July 2005 was $50,650.

At 30 percent, the High Desert region was the most affordable C.A.R. region in the state, followed by the Sacramento region at 20 percent. The Santa Barbara and Northern Wine Country regions were the least affordable in the state at 7 percent.
— The Boy in the Big Housing Bubble