And that represents an increase in affordability
There’s no shortage of information on how unaffordable houses are in Los Angeles or California, but there’s some heartening new information from the California Association of Realtors that shows that affordability at the beginning of 2016 made a slight but significant gain. The percentage of households that could afford to purchase the median-priced home in California and in LA County rose in the first quarter, a report reveals.
At the end of last year, only 30 percent of households could reasonably swing a median home in California, but in the first three months of 2016, that number rose to 34 percent. The median California home cost $465,280 at the beginning of this year, so potential homebuyers would have to make at least $92,571 to buy it. In LA County, there was also a 4 percent rise, from 27 percent up to 31 percent in the same time period. The median home in the county was $458,900, so a homebuyer would need to be making at least $91,302 to qualify.
A 4 percent rise might not seem like much, but a “normal percentage bump” in affordability is only around one or two percent, CAR’s senior economist Oscar Wei tells KPCC. But don’t get too excited yet.
Wei says that increased affordability is due to higher wages and seasonally lower housing prices. Prices tend to drop in the first quarter; in the first quarter of 2015, affordability in the state was 34 percent—the same as this year. It was the same story in LA County: first quarter of 2015 and 2016 both saw affordability at 31 percent. Housing prices also tend to rise as the midway point of the year rolls around, which Wei expects they’ll do again.