If mortgage rates fell to zero, a good chunk of California would still remain unaffordable to the typical house hunter.
My trusty spreadsheet peeked at a study by the real estate investment site Ziffy.ai that considered a monthly house payment at May’s median listing price, with no interest charged, in 364 U.S. metro areas – including 24 in California. A metro was deemed “unaffordable” if this payment exceeded 30% of the local median household income, assuming a hypothetical buyer made a 20% down payment and paid 1.6% of the purchase price for property taxes and insurance.
The study found that household incomes in 42 U.S. metros – including 11 in California – would not have met this 30% affordability standard in May if the lender didn’t charge interest. In fact, the six most unaffordable spots in the nation were from the Golden State, by this math.
At the top of the cost-burdened list was Santa Maria-Santa Barbara. Its $1.75 million median listing price generates a $6,212 monthly payment with a zero-percent mortgage, plus property taxes and insurance. That would eat up 78% of the metro’s median household income.
Here are the 10 other Golden State metros that fail the affordability test at 0%:
– Salinas: $1.24 million median price would cost $4,396 monthly at 0%. That’s 57% of income. This was the No. 2 worst nationally.
– Santa Cruz: $1.3 million median costs $4,600, 51% of income, No. 3 nationally.
– Los Angeles-Orange County: $1.1 million median costs $3,911, 49% of income, No. 4 nationally.
– Napa: $1.4 million median costs $4,967, 49% of income, No. 5 nationally.
– San Luis Obispo: $1.08 million costs $3,822, 46% of income, No. 6 nationally.
– Santa Rosa: $972,500 median costs $3,458, 39% of income, No 14 nationally.
– Ventura County: $984,735 median costs $3,501, 37% of income, No. 15 nationally.
– San Diego County: $929,000 median costs $3,303, 36% of income, No. 18 nationally.
– San Jose: $1.4 million median costs $4,924, 36% of income, No. 20 nationally.
– San Francisco: $996,500 median costs $3,543, 31% of income, No. 31 nationally.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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