While well-heeled buyers are competing for high-end priced homes throughout the Southland, the housing affordability index for the state has just reached its lowest level since December, 1984.
Only a fourth of California's households today have the essential annual income to qualify for a 30-year mortgage to buy the present median-priced, single-family home priced at $167,428.
Yet, from the San Fernando Valley southward to San Diego, purchases are setting a torrid pace for both new and resale dwellings, toppling scores of company records.
The June tabulations from the California Assn. of Realtors show that 75% of California families cannot qualify to buy that typical home, assuming a 20% down payment is required, along with an annual income of $52,011 to make monthly payments, including taxes and insurance, of $1,300.
Three and a half years ago, the CAR's index had dipped to a low of 24%. At that time, the median-price dwelling was $110,305.
Last May, the index was at 28% for a $160,073 home, while in June, 1987, the corresponding figures were 32% and $140,620.
To indicate the high cost of living in California, the national affordability index stood at 47% for June, and the median-priced house was selling for $90,600. That would call for a $704 monthly payment and a minimum qualifying annual income of only $28,145.
The suggestion, made here a number of times in jest--that would-be home buyers might move east, north or south to find that dream home--has never taken hold. But one newlywed couple we know has just settled into a cozy four-bedroom home in northeast Seattle for $109,000.
But back to California reality, citing the hottest example in home sales, Chicago Title Co. reports that nearly 30,000 homes were sold in San Diego County from January to June. The firm's charts show that 21,354 homes changed ownership and 8,534 new homes were bought--for a total of 29,888--during the first half of 1988.
"Nowadays, buyers are not waiting as long to buy their homes. Buyers are quickly getting into the market before things get worse," said Denis Rottler, the title company's San Diego County manager.
Today's buyers, he guessed, fear that growth-control proposals will lessen the already small inventory of homes available, in addition to pushing prices upward, and there is much concern that interest rates will not remain in the stable, 10%-plus area much longer, and will probably increase to 12% after the November elections.
"If the quantity is being constricted, it's a sure bet the price tags of homes will shoot ever higher. Growth controls certainly will widen the affordability gap and prevent many people from sharing in the American dream of home ownership. Growth controls divide our community into the homeowner haves and have-nots," Rottler said.
The firm's data showed that the June, 1988, volume of home sales was the second highest total for any single month since 1982, when it began charting such figures. In December, 1986, San Diegans had purchased homes at even a better pace, he added, because sellers flooded the market with attractive deals in anticipation of pending tax law changes that involved higher rates for capital gains.
McMillin Realty, claiming the title of the county's largest independent resale chain, reported record escrow openings of home sales of $113.2 million for the second quarter among its seven offices from Oceanside to Chula Vista.
"We are witnessing an unprecedented home buying rush right now, both new and resale. While housing demand is high throughout the country, it has been further heightened locally by anxiety over proposed building caps," said Scott McMillin, executive vice president.
The second quarter totals, he added, represent a 29% increase in sales volume over the same period in 1987 and an l8.7% jump over the first quarter of this year when the company had established its previous high mark.
The latest CAR chart shows the affordability index for June ranges from a high of 50% in Sacramento to 13% in the San Francisco Bay area. In between are 42% in Riverside-San Bernardino, 26% in San Diego, 20% in Orange County and 19% in Los Angeles.
Dale Colby, CAR president, recognizing the vast market that exists here for affordable housing, expressed dire concern that the affordability factor is compounded for first-time buyers, and warned that "California's strong economic position will be jeopardized over the long term if the affordable housing issue is not addressed."