6 ms·
Only 15% of Californians can afford a home, new data shows
- game_the0ry 3y agoAnecdote time. In 1995, my dad bought a house in Southern California for $550k. He was able to afford that on a $150K salary and my mom did not work. Today, that house is just under $3M. In order for me to afford that house today, I would have to make around $600K. Housing "market" is not a market.
- dragonwriter 3y ago> In 1995, my dad bought a house in Southern California for $550k. He was able to afford that on a $150K salary and my mom did not work. > Today, that house is just under $3M. In order for me to afford that house today, I would have to make around $600K. So, a house that you could afford on a 95th percentile household income (about 5× median) in 1995 takes about a 98th percentile household income (about 8× median) today? Not seeing a lot of significance here. > Housing "market" is not a market. Some things having demand increaae more than supply doesn't make then “not a market”.
- game_the0ry 3y ago> Not seeing a lot of significance here. $150K in 1995 is ~$300K in 2023 dollars. See the significance now? > Some things having demand increaae more than supply doesn't make then “not a market”. A market that benefitted from the downtrend of interest rates to ZIRP, PPP "loans" (more like grants), investors (which make up 20-30% of buyers, though they make like 1% of owners), and a Fed with $8.2 Trillion on balance sheet, is not what I would call a functioning market. Questions worth contemplating - if all the post covid stimulus did not happen, what would have happened to the housing market? And what would have happened to the economy? Shouldn't the rate of increase in income track with rate of increase in house prices?
- jeffbee 3y agoAh I love that last paragraph. The good news is you can always move to Mono County, a place with no economy or population to speak of. Simply move to Bridgeport.
- s0rce 3y agoWinters are also quite cold in Bridgeport, even by non-California standards.
- gustavus 3y ago> The new figures represent the lowest home affordability rate since 2007, a news release said. Oh that's interesting.... What year came after 2007?
- WillPostForFood 3y agoTitle is misrepresents what the report says. The report says that 15% can afford the *median* priced home, not "afford a home". 15% isn't good, not is bad as the article suggests.
- pixl97 3y agoSo, a better dataset would be breaking housing prices down into availability brackets with matched with earnings. What does the data look like then?
- fnordpiglet 3y agoIt’s even more deceptive as it’s quoting for a single family detached home. Condos are nearly twice that affordability metric. Again, the median, meaning half the condos available are more affordable than that median. I think when most people, especially urban dwellers, think of as a “home” as a primary residence, and don’t constrain it to single family detached housing.
- za3faran 3y agoDon't condos usually have HOA fees in the hundreds of dollars per month?
- schmookeeg 3y agoAs do most tract homes built sometime after the 1980s.
- fnordpiglet 3y agoIt depends on the condo how much. But usually millage and values for tax purposes are often less than houses. I’ve not done the fully loaded math, but I would expect including maintenance and other expenses condos are less per month than an equivalent priced house.
- oceanplexian 3y agoI don’t think it’s unfair to expect that a person making the median income can afford a Single Family detached home. This is the definition of the American Dream. The USA has an abundance of space and natural resources. California is a big place. There’s no technical reason homeownership should be out of reach. If you want to live and die in an apartment, that’s great, but it should be a choice.
- zerr 3y agohttps://web.archive.org/web/20231111221611/https://ktla.com/news/california/only-15-of-californians-can-afford-a-home-new-data-shows/ https://web.archive.org/web/20231111221611/https://ktla.com/...
- spurgu 3y agohttps://archive.is/VsqkF https://archive.is/VsqkF
- woeirua 3y agoDon’t worry, I’m sure the usual real estate shills will be by to assure us that were not in a bubble and that prices only go up.
- jeffbee 3y agoPeople who own houses in expensive coastal markets can't easily be dislodged. We can't force them to put their houses on the market or adopt reasonable prices. The rental market, however, is a quite different thing. I track the rental market in Berkeley very closely and while rents have been steadily declining since 2019, in the past few months they have been plummeting. Current market price for older 1-bedroom apartments has fallen back to 2009 levels. Almost sort of affordable. I have a feeling that a lot of small-time landlords who thought they were signing up for a lifetime of "passive income" are getting kicked in the teeth right now.
- 2devnull 3y agoI find that dubious but want to believe. Can you cite the numbers at least?
- jeffbee 3y agoAll my data and methods are at https://observablehq.com/@jwb/berkeley-rent-board-data https://observablehq.com/@jwb/berkeley-rent-board-data The key graph is https://observablehq.com/@jwb/berkeley-rent-board-data#cell-613 https://observablehq.com/@jwb/berkeley-rent-board-data#cell-...
- 2devnull 3y agoThis is great. If you update or do more like this in the future it would be great to have 2 additional things: n counts, and variance/sd. I might worry that for example the high water mark in 2020-2021 had a much smaller n count and if the stats were more people weighted the decline would be less meaningful. In other words if only one tenant rented at the peak year in some very outlier luxury unit, and then next year 1000 tenants came along and rented more typical lower priced units, it would look like a decline. But it’s not a real decline, if that makes sense? I also wonder if (strongly suspect) the temporary eviction ban could be considered a temporary price increase that has now been removed, so the decline you note is not a real decline for that reason, but a reversion of public policy that directly impacted prices for a year or two then vanished. Thank you for doing this!
- slt2021 3y agothanks to newsom, it is all his legacy that he is trying to expand nationally by trying to become presidential candidate sometime in the future
- parker_mountain 3y agoFunnily enough, one of the biggest problems this state has is Prop 13. It's hard to repeal, although we've had 40~ years to fix it. > Passage of the initiative presaged a "taxpayer revolt" throughout the country that is sometimes thought to have contributed to the election of Ronald Reagan to the presidency during 1980.
- seehafer 3y agoProp 13 was an effect, not the cause. The cause was and remains a lack of housing supply. Prop 13 was a knee jerk reaction to skyrocketing property values in the 70s caused by (among other things) policy (largely NEPA and CEQA) that was weaponized to make it ever more difficult to build.
- parker_mountain 3y agoYes, I wouldn't say it's the biggest problem. But it has created a serious block against housing liquidity. Something that protects seniors and those on fixed incomes from losing their homes is good - lots of states have laws like that - but prop 13 is fatally flawed.
- LexGray 3y agoI’ve seen quotes that something like 40% of all California politics revolve around prop 13. The promise your parents aren’t going to lose their house from arbitrary reassessments is a strong one (instead it will because they can’t afford medical bills). Prop 19 (2020) at least put a dent when it came to multi-home ownership and inheritance.
- pauldenton 3y agohttps://www.youtube.com/watch?v=ExgxwKnH8y4 https://www.youtube.com/watch?v=ExgxwKnH8y4 If only Californians didn't actively try to stop construction. If you want to build housing and that will cast a shadow on a nearby playground, that's no good. California is literally the worst and most expensive place to develop anything.
- ajmurmann 3y agoAnd if we didn't have outdated fire codes that prevent us from building nice apartments that could be a home for a family: https://www.niskanencenter.org/how-to-build-more-family-sized-apartments/ https://www.niskanencenter.org/how-to-build-more-family-size... The things we do to make housing expensive goes on and on...!
- parker_mountain 3y agoFortunately, it's gotten a lot better since then. But yeah, it's still rough.
- dangus 3y agoAs far as home ownership rate, over 50% of Californians own their home. https://ipropertymanagement.com/research/homeownership-rate-by-state https://ipropertymanagement.com/research/homeownership-rate-... It is the second lowest number in the country, but I always find articles like these a bit of a contrast compared to the actual home ownership statistics.
- habitue 3y agoHome ownership rate is a lagging indicator, affordability is a leading indicator. Many people in California own their homes because they bought them a long time ago and held on.
- fiddlerwoaroof 3y agoI wonder if there’s some measure to forecast this, though: if the median age of a homeowner is x years (and the trend is aging), then in y years, half the currently owned houses will have changed owners. What are the values of x and y?
- s1artibartfast 3y agoLagging or leading what exactly? Home ownership is the present indicator of home ownership.
- ImPostingOnHN 3y agoThe thing we want to measure and address is affordability for new buyers, not current ownership. Addressing the former will increase the latter, because the latter is a lagging indicator of affordability (which, again, is what we want to measure)
- xboxnolifes 3y agoHome owners bought their houses in the past. Affordability indicators look at present rates.
- YokoZar 3y ago
- xyzelement 3y agoWhat that means is that significantly more Californians are trying to buy a home compared to what is available as inventory. If you somehow "reset" the price to some arbitrarily "low" level, it would immediately get bid back up to what it is today. On the other hand, if you somehow flooded the market with thousands of homes and there were fewer buyers than that, the price would plummet.
- 7e 3y agoNo, it means that interest rates have recently doubled. That's the primary driver of affordability. Typically a house is least affordable when it is first purchased, because it is obtained with a 30 year fixed interest rate mortgage. So, over time, the income of the owner goes up with inflation, but the cost of the house remains the same, making it more affordable over time. Older generations can easily afford their houses, but younger generations need to scrimp for a time.
- bequanna 3y agoIt would take many, many thousands of homes. Demand is so much greater than supply almost everywhere in the US.
- seanmcdirmid 3y agoNo. Just put the houses somewhere in California away from SF/LA, and you wouldn’t need too many to satisfy demand for people willing to live away from those two areas.
- amanaplanacanal 3y agoThere is soooo much pent up demand. We need to build like crazy, probably for years.
- beretguy 3y agoAnd then what? After we are done building for everybody?
- 3y ago
- kristopolous 3y agoIs anyone skilled enough with FRED to link to cost of home / annual income since like 1950 to understand what's going on here Also can you explain how the definition of household income has changed? Was it ever more multigenerational than now (I know it's moved from man to man+woman, but I'm wondering if the idyllic households of the 1950s is actually an unrepresentative sample). Intuitively the average age of first child was close to 20 in the 1950s which meant you'd have say, 25/45 generational pairs as opposed to today when it's much closer to beginning/end career pairings and certainly in many cultures generational cohabitation is much more the norm than the exception. Essentially I want to understand the trend of affordability with the context of the conflating social factors
- vinyl7 3y agoLike this? https://fred.stlouisfed.org/graph/?g=17u6e https://fred.stlouisfed.org/graph/?g=17u6e
- kristopolous 3y agowow! The growth after 2019 is outlandish! I'd like to conclude this is not merely "greedy AUM groups buying up all the housing stock" because that's the X factor but I can't for the life of me think of a social factor which can normalize that trend (such as say, increasing longevity, net migration, etc.)
- andrewstuart 3y agoThe future is global mega landlords owning all housing.