As mortgage rates fall, 250K more SoCal households can afford starter homes

Even with cheaper mortgages, homeownership is out of reach for most

Los Angeles /
Jul.July 26, 2019 09:00 AM
John Burns (Credit: iStock)
John Burns (Credit: iStock)

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


Related Articles

arrow_forward_ios
(Illustration by The Real Deal with Getty)
Hiring slows for real estate jobs across SoCal market
Hiring slows for real estate jobs across SoCal market
(Illustration by Priyanka Modi for The Real Deal with Getty)
August home sales rose 8% in SoCal, despite summer slowdown
August home sales rose 8% in SoCal, despite summer slowdown
Rochelle Atlas Maize, Derek Reilly, Cindy Carvel Vincent Vallejo, Derek Reilly, Cindy Carvel)
Agents shift home price strategy as bidding wars deflate
Agents shift home price strategy as bidding wars deflate
46-percent rise in SoCal home payments
Falling SoCal home sales caused by 46% rise in payments
Falling SoCal home sales caused by 46% rise in payments
(Illustration by Kevin Cifuentes for The Real Deal with Getty Images)
Home prices in SoCal fall 1.3% in 30 days, data show
Home prices in SoCal fall 1.3% in 30 days, data show
Housing and market uncertainty
Fannie Mae: Housing outlook for consumers hits 11-year low
Fannie Mae: Housing outlook for consumers hits 11-year low
(Illustration by The Real Deal with Getty Images)
Rising interest rates put brakes on home sales
Rising interest rates put brakes on home sales
Compass' Aaron Kirman with 1047 North Bundy Drive (Compass, Zillow)
Trousdale Estates mansion sells for $42M after price cuts
Trousdale Estates mansion sells for $42M after price cuts
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...