Housing Affordability - "Where can the middle class afford to buy a home today? Affordability has worsened in the past year, as home prices have climbed faster than incomes and mortgage rates have risen." ...
Housing Affordability:
Actually, it's an age-old question. Housing affordability is a concern everywhere and all the time. Of course, housing affordability eventually boils down to a question of what people can afford to pay ... not necessarily what the price is. For instance, from 2008 through a couple of years ago the prices were uniformly and astonishingly low in almost all areas. BUT ... the economy was so bad at the time and lending was so tight that no one but some lucky investors could afford to pay them anyway.
Trulia, the real estate data collection and reporting company has recently done a study of what areas of the nation are affordable and which are not.They've called it their "Middle Class Affordability Report", and the idea is to outline which areas are actually available as housing to the Middle Class and which are now out of reach. The recovery in real estate has been widespread, but it has not been uniform.
Jed Kolko is the Chief Economist at Trulia. Here is a Guest Post by Jed as it appeared the other day in the Huffington Post. He goes into great detail.
Within the greater L.A. area, there are several areas that rank with San Francisco as unaffordable to the Middle class. Among those are the Pasadena / San Gabriel Valley area where, according to this Trulia study, only about 13% of homes are priced in ranges affordable to the Middle Class. That's not a really good sign for our local market. According to this study we are simply too expensive here in the San Gabriel Valley for the Middle Class. However, there are a couple of things to keep in mind here. The first is that markets don't exist in vacuums. Different forces push them up and down and those forces come and go. In our area we have been seeing prices pushed upwards by the influx of investment money from overseas, mostly from China and Canada. Like all "trends" this one will also subside and wane to be replaced by another. When it does, that upwards pressure on prices will ease.
The other, and more important, thing to keep in mind is that the determination of whether a "Middle Class" buyer can afford a home is determined by several factors. The price of the home is only one. Also important is the amount of the average wage earned by a Middle Class worker. As people earn more they are able to pay more for housing. The economy has been recovering ... but slowly. The rate of that recovery has not kept up, at this point, with the rise in real estate prices in our area. As the economy continues to rebound and earnings by the Middle Class increase, we should see the affordability of real estate in our area become more attractive.
Housing Affordability:
Middle Class Priced Out Of Much Of Southland
Pasadena & San Gabriel Valley Becoming Out Of Reach
We've been hearing the question lately, "Can I still afford to buy in your area?"Actually, it's an age-old question. Housing affordability is a concern everywhere and all the time. Of course, housing affordability eventually boils down to a question of what people can afford to pay ... not necessarily what the price is. For instance, from 2008 through a couple of years ago the prices were uniformly and astonishingly low in almost all areas. BUT ... the economy was so bad at the time and lending was so tight that no one but some lucky investors could afford to pay them anyway.
Trulia, the real estate data collection and reporting company has recently done a study of what areas of the nation are affordable and which are not.They've called it their "Middle Class Affordability Report", and the idea is to outline which areas are actually available as housing to the Middle Class and which are now out of reach. The recovery in real estate has been widespread, but it has not been uniform.
Jed Kolko is the Chief Economist at Trulia. Here is a Guest Post by Jed as it appeared the other day in the Huffington Post. He goes into great detail.
Where Can The Middle Class Actually Afford To Buy Homes? - HuffingtonPost
HuffingtonPost 05/14/2014 8:17 pm EDTHowever, in many markets, especially along the coasts, home ownership is out of reach for the middle class. Even having a college degree is no guarantee that home ownership is within reach in the priciest markets. There's no easy way to make housing more affordable, though new construction can help.Read More At: http://www.huffingtonpost.com/jed-kolko/where-can-the-middle-clas_b_5326891.html
Is The San Gabriel Valley Affordable?
As you could see in Jed's article, seven of the ten least affordable markets are in California. The worst of those is San Francisco, with only 14% of homes in the Metro Area avaiable to the Middle Class. Coming in at second place is the Los Angeles area with only 23% of homes actually affordable, and Orange County is third and not much better at about 24% of homes that could actually be purchased by middle class homeowners.Within the greater L.A. area, there are several areas that rank with San Francisco as unaffordable to the Middle class. Among those are the Pasadena / San Gabriel Valley area where, according to this Trulia study, only about 13% of homes are priced in ranges affordable to the Middle Class. That's not a really good sign for our local market. According to this study we are simply too expensive here in the San Gabriel Valley for the Middle Class. However, there are a couple of things to keep in mind here. The first is that markets don't exist in vacuums. Different forces push them up and down and those forces come and go. In our area we have been seeing prices pushed upwards by the influx of investment money from overseas, mostly from China and Canada. Like all "trends" this one will also subside and wane to be replaced by another. When it does, that upwards pressure on prices will ease.
The other, and more important, thing to keep in mind is that the determination of whether a "Middle Class" buyer can afford a home is determined by several factors. The price of the home is only one. Also important is the amount of the average wage earned by a Middle Class worker. As people earn more they are able to pay more for housing. The economy has been recovering ... but slowly. The rate of that recovery has not kept up, at this point, with the rise in real estate prices in our area. As the economy continues to rebound and earnings by the Middle Class increase, we should see the affordability of real estate in our area become more attractive.
