Surging property prices left fewer California residents able to afford a home in December than at any time in more than a decade, according to a study released Thursday.
Just 28% of California households could afford to buy a median-priced house in the most populous U.S. state in December, the smallest share since 1991, when the average stood at 25%, according to the California Assn. of Realtors.
California's least affordable home market was in 1989, when only 14% of households could afford to buy homes in May, June and July of that year.
By February 1999, a record high of 43% of households could afford homes in the state.
Despite California's ailing economy and weak job market, population growth and low mortgage rates are driving demand for housing higher amid a low supply, an economist with the California Assn. of Realtors told Reuters.
"A lot of people come off the fence when financing options are favorable," said Robert Kleinhenz, a senior economist with the trade group.
"But we're only adding about 150,000 new units a year while we add 250,000 households a year, so we have a shortfall of about 100,000 units a year driving home prices higher no matter what has happened with interest rates," he said.
The median price of a detached, existing single-family home in California in December rose 20.2% to $338,110 from $281,330 a year earlier, the industry group said.
A household required a minimum gross annual income of $81,120 in December to buy a house in the state, based on a typical 30-year, fixed-rate mortgage at 6.10% and assuming a 20% down payment, the industry group said.
The minimum household income needed to buy a home a year earlier in California was $71,450, assuming a prevailing interest rate of 6.77%, the group said.