Even the rich can't afford the state’s home prices
California’s housing market now accounts for a third of the nation’s housing market value, according to a new data from Zillow.
The state’s housing value has risen to $3.7 trillion since February 2012, driving millions of homeowners into its rich market. However, Zillow found that even many high-income households cannot afford Golden State’s steep home prices.
“Even if they were to theoretically put no money down to purchase the median-valued home, a homebuyer in 22 of the country’s 35 largest metro areas could still make their monthly mortgage payments without spending more than 30% of their income on housing. But not in California,” Zillow said in a statement.
The cost of housing in housing in most major California metros has soared so high that, even with a 20% down payment, the median household is having a hard time ponying up for a median-priced housed.
In addition, the average California household would either have to put way more than 30% of their income on housing or go beyond the standard 20% down payment just to make do on their monthly mortgage.
“Median annual household incomes in the pricey San Jose and San Francisco metros sit far above most areas: $124,300 and $107,600, respectively, compared to the national median of $63,300 per year,” Zillow said. “But that extra income is not enough to compensate for incredibly high local home values – the median home in San Jose has a value of $1.25 million, and in San Francisco it’s worth $957,400.”
Zillow said that even with a 20% down payment, homebuyers still end up exhausting over 30% of the typical household’s income on the $4,900 average monthly payment in San Jose and the $3,760 average payment in San Francisco.
“To bring that monthly payment in San Jose down to $3,108 per month – within the 30% threshold – a homebuyer making the median income in the San Jose metro would need to make a ludicrous down payment of almost 50%, or $614,100, on the median-valued home,” Zillow said. “To put that in perspective, the required down payment alone is more than the combined values of a high-priced home in Kansas City ($336,200) and Pittsburgh ($266,800) – to say nothing of the entry-level or even median home in those areas.”
Even homebuyers in Silicon Valley can’t afford the typical entry-level home in San Jose as it is nearly out of reach for a median-earning household. According to Zillow, the biggest loan average Silicon Valley homebuyers could afford without exceeding the 30% barrier would be $631,700, which is 20% below the typical entry-level home value of $791,500.
