Housing affordability is one area where California can expect to experience long-term pain. Statewide, the percentage of households that earn enough to purchase a median-priced home rose 34 percent in early 2015 before settling in the low 30s—down from a high of 53 percent in 2011 and 36 percent in 2014. In high-priced coastal cities, percentages have fallen into the teens and lower.
The cause? Too many people, not enough homes being built, and rising prices that make it difficult, if not impossible, for many renters to buy. With renters paying a larger share of their income on rent, it is more difficult for them to save for a down payment.
“When I think about affordability, the first thing I think is, ‘Do we have an adequate supply?’” said Raphael Bostic, Ph.D., Judith and John Bedrosian Chair in Governance and the Public Enterprise at USC’s Price School of Public Policy, who recently returned to USC following three years as chief policy and research advisor to the Secretary of the U.S. Department of Housing and Urban Development.
“In many markets in California, the answer is no.”
Foreign Buyers Keep the High End Hot
From San Francisco to the Silicon Valley to Los Angeles and Orange counties, everything high-end is “hot”—despite worries about the economy in other countries.
Asian buyers continue to fuel an active luxury home market in the Bay Area and Southern California, according to Zackary Wright, senior vice president of Christie’s International Real Estate for the Western and Asia Pacific Region.
“We don’t anticipate a significant impact,” said Wright about the economy’s effect on the luxury market. “If anything, it could boost investment in the very top end by motivating them to hasten their investment in hard assets like real estate.”
Are luxury home prices sustainable?
“I’ve been doing this for 30 years, and I can assure you that markets are cyclical,” said Sotheby’s International Realty agent Janet Feinberg Schindler. “But every time the San Francisco market takes a step back, it seems like it takes two more steps forward.”