Everyone knows that living in California is not cheap.
But land and building costs have never been higher than they are now because of inflation and the state of the economy.
That’s not the greatest news for those in the market for their first home.
In Real Estate Market
This is particularly true in the real estate market, where a recent survey by Point2Home found that renters in 46 out of the 50 major U.S. cities can no longer afford a starter home due to the recent increase in mortgage rates.
The real estate company compared the median price of a starter home with the median income of renter families to calculate the likely effect of recent rate hikes on affordability.
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They found that in most major property markets throughout the United States, renters’ expectations about how easy it would be to buy a house were quite different from the reality.
Renters in Los Angeles, Long Beach, San Jose, and Oakland face the most challenging housing markets in the state.
Employees in such areas make less than forty percent of what is required to pay a month’s mortgage payment on a modest property.
The typical salary of a Los Angeles renter is roughly $50,000, but the minimum income needed to qualify for a mortgage is about $167,000. This puts them beyond the threshold for an affordable house by $117,369 short.
Even if the average salary in Long Beach and Oakland is above $50,000, the situation is a little better there. Mortgage affordability in these two locations is between $140,000 and $150,000, so first-time buyers in either location would need an income of at least $90,000.
Entry-Level Property Price in San Francisco is Higher
Additionally, the analysis revealed that the typical entry-level property price in San Francisco is higher than in any of the top 10 most inexpensive cities.
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Here, the median renter family income is $100,715, while the median income for a first-time buyer is $251,190. This means that San Francisco renters are $150,475 (or 60%) short of being able to buy their own home.
According to the data, only renters in four major U.S. cities had incomes that were at least 100% of the national median for a one-bedroom apartment. That list includes such metropolises as Detroit, MI; Tulsa, OK; Memphis, TN; and Oklahoma City, OK.