There are a handful of reasons why now is the perfect time for would-be first time homeowners to take the plunge — low interest and high employment rates among them. That is, unless the house hunt is in California.
In Bloomberg’s index of the 100 largest metropolitan areas in the U.S., there are six regions in which median income is lower than the minimum salary required for a mortgage. Five of these regions are in the Golden State, including Los Angeles, Oxnard and San Diego.
L.A., in fact, has one of the most pronounced disparities between the median income and the minimum earnings needed to buy a single-family home as of 2015: $20,815.
So why is it that affordability is such an issue out West? A tight supply — especially of starter homes — mixed with intense job growth are two culprits, said Trulia’s chief economist Ralph McLaughlin.
“[It’s] really it’s a combination of strong job growth and little new housing supply,” he told Bloomberg. “If you want to find a home it’s going to be difficult, and even if you do find one, it’s going to be expensive.”
Meanwhile, the Midwest market is slaying with its housing bargains. In Des Moines, Iowa, for instance, the estimated monthly mortgage is $613, or $22,000 for a year — that’s less than a third of the area’s median household income of about $72,200 last year.
Among the other affordable regions are Pittsburgh, Baltimore, Minneapolis, Omaha and Kansas City, Missouri.
It’s no surprise that L.A. isn’t exactly ideal for aspiring new homeowners. In May, L.A. was ranked by the National Association of Home Builders as one of the most unaffordable housing markets in the country and earlier this year, Forbes named it the fifth worst city for renters. [Bloomberg] — Cathaleen Chen