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As mortgage rates fall, 250K more SoCal households can afford starter homes
Even with cheaper mortgages, homeownership is out of reach for most
A new study shows affordability in the single-family markets in Southern California increased and about 257,000 more people can buy a starter home thanks to cheaper mortgage rates — but that doesn’t help the majority.
The study by John Burns Real Estate Consulting found that the number of qualified local residential buyers rose by 15 percent since last November in Los Angeles, Orange, Riverside and San Bernardino counties, according to a report by the Orange County Register. That’s after 30-year fixed-rate mortgages dropped from nearly 5 percent to about 3.8 percent.
The report looked at households with incomes that could comfortably buy a residence at 80 percent of the local median-priced home, which is a standard for starter homes. But even with the cheaper mortgages, home sales have persistently been slowing for nearly a year, and only one third of households in Southern California can afford a starter home.
The cheaper mortgages added about 129,000 more households in Los Angeles County that can now theoretically buy a starter house compared to last November. That’s the fourth lowest affordability rate on the list of 131 major U.S. markets. Just about 27 percent of households can afford 80 percent of the local median-priced home. About 48,250 more households can afford homes in Orange County, where still just 29 percent of households can afford a starter home.
San Francisco still reigns as the least affordable city, where just 11 percent can afford a starter home. [OC Register] — Gregory Cornfield