Housing Affordability Takes A Hit

With a recovering housing market comes higher-priced homes, and that can be a mixed blessing.

On one hand, houses are worth more, so sellers make more money and owners have more equity in their homes. It also means that not as many people can afford to buy a home, as data released today by the California Association of Realtors shows.

During the fourth quarter of last year, 32 percent of the home buyers in the state could afford to buy a median-priced single-family home – $431,510 – the same percentage that was able to make the purchase during the third quarter, according to the association’s quarterly report on housing affordability.

But affordability took a huge drop year-to-year: 48 percent of home buyers in California could afford a median-priced single-family home during the fourth quarter of 2012, according to the report.

That trend held true in virtually every submarket in the state, including the Inland Empire.

In San Bernardino County, 62 percent could afford a median-price home during the fourth quarter of 2013, down from 64 percent during the third quarter but down from 76 percent during the fourth quarter of 2012.

Riverside County was much the same: 23 percent could buy a median-priced home during the fourth quarter of last year, down from 45 percent during the third quarter but down from 62 percent at the end of 2012, according to the report.

Housing affordability in California hit a record 56 percent during the first quarter of 2012 but has declined every quarter since, and that trend probably won’t change anytime soon, according to one person familiar with the local housing market.

“I hate to say it but housing affordability in the state will continue to drop,” said Steve Johnson, director of the Riverside office of Metrostudy, a national housing databank used by public and private sources. “Median prices are going to keep going up, and that will drive more people out of the market, which isn’t good.”

Government can help solve the housing affordability problem through several actions, including letting developers build more densely in some locations, Johnson said.