Homes market grows tough

first_imgHousing affordability remained at 14 percent in December, matching its record low level, as rising prices and interest rates continued to slow the market, a trade association said Thursday. December’s affordability rating, measured by the percentage of households that could afford the median-price home, fell an annual 5 percentage points and remained unchanged from November, said the Los Angeles-based California Association of Realtors. In December, the median price for a home in the state soared 15.6 percent to $548,430, and sales plunged 17.6 percent. Affordability first sank this low in the late spring and summer of 1989, a period when the median price was in the $200,000 range and lenders charged around 11 percent for a 30-year fixed-rate mortgage. In Los Angeles County, where the median-price home cost $552,760, affordability fell an annual 5 percentage points, to 12 percent, but that was one point better than the record low of 11 percent in November. Affordability in Ventura County, where the median-price home cost $675,680, slipped an annual 3 percentage points, to 13 percent, and was unchanged from November. The high desert, with a median price of $320,490, remained the most affordable region in the state at 24 percent. But affordability in this area, which includes the Antelope Valley, plunged 17 percent points from a year earlier. The minimum household income needed to purchase a median-price home in California in December was $134,200, based on an average mortgage interest rate of 6.33 percent and assuming a 20 percent down payment. Market analyst Nima Nattagh believes that this market is past its peak. “I think this is probably the beginning of a slowdown in the market that’s been anticipated. I think prices are still going to go up, but below the 10 percent range, and the volume of sales will slow significantly,” he said. Gregory J. Wilcox, (818) 713-3743 [email protected] 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! AD Quality Auto 360p 720p 1080p Top articles1/5READ MORESanta Anita opens winter meet Saturday with loaded card By comparison, affordability across the nation in December was 49 percent, down from 55 percent a year earlier. The situation won’t improve anytime soon. “We’ll probably hit new (affordability) lows this year, given that we expect the median price in California to go up 10 percent,” said Robert Kleinhenz, the association’s deputy chief economist. He also expects fixed-rate mortgage interest to increase half a percentage point and climb to 6.75 percent by year’s end. That’s still low by historical standards but will work against affordability, since housing prices are expected to continue climbing. And the rate has been above 6 percent for four months for the first time in several years. Affordability fell from year-earlier levels in 31 of 32 regions tracked by the association. The region in which it did not fall, Contra Costa, was flat, with affordability remaining at 10 percent. last_img

Leave a Reply

Your email address will not be published. Required fields are marked *