The dream of owning a home in California is becoming more challenging than ever, according to a new study from the California Association of Realtors (CAR). CAR just published its second quarter 2022 housing affordability report, and the numbers don’t bode well for anyone hoping to buy a home in the Golden State.
Housing affordability in the state is at its lowest level in almost 15 years. The median home price in California is now a staggering $883,370. Only 16 percent of households in the state can afford to buy a home at this price.
According to the CAR report, you would need to show a household income of at least $199,200 a year to afford the median home price of $883,370. Your payments for this home would be $4,980 a month for a fixed rate mortgage of 30 years at a 5.39 percent interest rate. This includes principal, interest, and taxes. It also assumes that you put 20 percent down on the home or about $177,000.
To put these numbers in perspective, the U.S. Census Bureau reports the annual median household income in California is $78,672 and the per capita income for the state is $38,576. By either measurement, homeownership is financially well out of reach for many residents in the state.
California and the backlash of affordability
The combination of record high prices and interest rate hikes have made the dream of homeownership simply unattainable for many Californians looking to crack the housing market. And it’s not just people looking to buy a home that are feeling frustrated. Renters are also struggling with the high cost of living in the state.
The National Low Income Housing Coalition (NLIHC) ranks California as the second most expensive state for renters (behind Hawaii, which ranks number one). To afford the rent on a two-bedroom home in California, the NLIHC estimates you would need an annual household income of $81,133.
The high cost of housing has left many residents wondering if they even want to stay in the state. In 2021, over 360,000 people left the state, some citing the overall high cost of living as their reason for moving. California ranks second in the country for outbound moves. Common destination points were Texas, Washington, and Florida.
Are you planning on joining the exodus of people leaving California?
If so, where will you go? Let us know in the comments section. And if you appreciate this content, please like, follow, and share. Thanks so much for reading!