Jim recently presented at an East Bay Economic Development Alliance and California Association for Local Economic Development Training Series on the importance of having housing affordable to the local workforce. So we thought we’d take a look at current housing trends in California.
Sales in February rose 9% from a year earlier. The median price increased by 3.7% — marking a 47-month upward streak. In such a hot market, would-be sellers are conflicted about whether to cash in now or wait for prices to rise further. Some have begun to question how long the hot market can last.
Home values are expected to climb this year, given low mortgage rates and steady job growth. But for many people, wages aren’t rising fast enough. Economists predict that prices will increase less than in previous years as families increasingly struggle to afford a home.
Rising Cost of Housing
Although California boasts some of the highest wages and fastest job growth rates in the nation, high housing costs are pushing many people out of the Golden State. In fact, California experienced a net loss of 625,000 residents between 2007 and 2014; the vast majority ended up in Texas, Oregon, Nevada, Arizona, and Washington. Those who left tended to be low- and middle-income workers.
Flat Homeownership Rate
Unaffordable home prices have caused homeownership rates to trend much lower in California than in other states. In 2014, California ranked 49th in homeownership, with only 53.8 percent of homes being owner-occupied. California’s average homeowners spent 25.4 percent of their household income on housing costs — more than homeowners in any other state. Texas homeowners, by contrast, spent an average of 19.3 percent of their household income on housing.
Written by Jeff Khau, a Senior Analyst at RSG