A combination of tight housing inventories and high prices has made it difficult for those who are interested in purchasing a home in California. As such, even those who are not interested in purchasing a luxury home are finding themselves faced with increased home prices just as much as those who wish to purchase a luxury home are finding that the prices are steadily increasing. This is particularly true in the Southern California region, where prices are rising in every area of the market.
Increasing Home Prices
According to the California Association of Realtors, only seven of the 32 reporting counties in the state had homes with prices that are considered to be affordable to the average homebuyer. With affordability determined by the area’s median household income, 25 of the counties had home prices that were considered to be out of reach for the typical household.
The California Association of Realtors also found that less than one-third of the single-family homes, condominiums and townhomes available for sale are at or below the state median income of $60,244. In fact, the median price of a home during the second quarter of 2015 was $446,980, which is nearly 50 percent higher than what a California household earning the median annual income could afford to purchase. Altogether, only 29 percent of available homes in the state are at or below the $304,490 price that the state’s median annual income can afford. Statewide, the median annual price is $142,490 above this figure at $446,980
While housing is affordable in some regions of the state, the state as a whole is experiencing a significant gap in terms of what homebuyers can realistically afford and the actual home prices in the area. Furthermore, the state lacks an adequate supply and mix of affordable housing options in the areas where most of the state’s workforce is located.
California’s Most Costly Places to Live
According to the report released by the California Association of Realtors, San Francisco County was the least affordable county to purchase a home in California. While the median income in the county is $75,910, the median home price is $1.2 million. Those who earn the median annual income could only afford to purchase a $383,670 home. With a median annual income only able to afford a $452,020 home where the median price of a home is $1.1 million, San Mateo County is the second least affordable place to purchase a home in California.
On the other end of the spectrum, Kings County is the most affordable, with the area’s median annual income capable of purchase a home at $243,730 where the median home price is just $186,330. Most of the counties offering affordable living options are located in the far less desirable Central Valley and Northern California Regions. In addition to Kings County, these included: Merced, San Bernardino, Tulare, Shasta, Fresno and Madera counties. In each of these counties, the median annual income is higher than the median home price.
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(all data current as of 7/24/2017)
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