According to the California Association of Realtors (CAR), in the third quarter of 2018 just 27% households in California would be able to afford a median priced home at $588,530, requiring an annual income of at least $125,540. While this is up 1% from second quarter, it’s down 1% from the same time last year. The percent able to afford a home is even lower in some counties, such as Los Angeles County and Orange County, where it is 22% and 20% respectively. For Orange County, this is unchanged, but Los Angeles County was tied with California’s average in the second quarter. Most Southern California counties were relatively static. A few counties are taking the hit better than Los Angeles and Orange counties, such as Riverside and San Bernardino counties where affordability are at 37% and 48% respectively.
Sales numbers, though, declined throughout the state and especially in coastal areas. This is a direct result of increasing prices and interest rates. Fortunately, prices seem to be at a peak and can only stay still or go down from here. Unfortunately, interest rates are still going up, which would negate some of the effect of dropping prices.