By: Kevin Felt Staff Writer
With almost five out of six Los Angeles County households now unable to afford a median-price home, economists have called the current affordability rate a "danger zone.'
In June, the figure hit a 14-year low, with only 17 percent of households able to afford a median-priced home, according to figures released Wednesday by the California Association of Realtors.
The figure was a 12-percent decrease from June 2003, when 29 percent of households could afford a median-priced home.
By comparison, the national rate stood at 52 percent.
"That tells us how severely impacted this housing market is,' said Robert Kleinhenz, CAR's deputy chief economist.
Kleinhenz pointed out that much of the market is now dominated by repeat home buyers who are able to apply equity from the sale of a previous home toward making a higher down payment.
"It's first-time home buyers who continue to face difficult circumstances when affordability is so low,' he said. "That continues to be a cause for concern.'
Aida Dimejian, owner-manager of Century 21 Golden Realty in Pasadena, said that low affordability is driving people farther and farther away from the places they work.
"It's an extreme challenge for Realtors because it is very difficult to find first-time, entry-level housing in Pasadena and its vicinity. We have agents taking buyers out to Pomona or Chino,' she said.
Raphael Bostic, director of the Casden Real Estate Economics Forecast at the USC Lusk Center for Real Estate wasn't surprised by the figures, which he said put the region at a "real competitive disadvantage.'
"It's not super surprising, but it's not encouraging either for people who are looking to get into the market at this point,' he said. "In the long run it can't be healthy.'
Expecting year-to-year price increases to drop from recent highs in the 30-percent range possibly into the teens in the coming months, Kleinhenz said affordability should stabilize in the coming months.
"The increased amount of inventory available suggests that maybe we are reaching a plateau for the Housing Affordability Index,' he said.
The minimum household income required to purchase a $445,000 median-priced home was $106,000, assuming a 20-percent down payment and a 30- year, fixed rate mortgage at 6.01 percent.
Kleinhenz said that the figure is calculated based on housing costs accounting for no more than 30 percent of a household's gross monthly income.
"That's kind of the ideal percentage of income for housing expenditures,' he said. "In fact, for many households, the actual monthly payment is closer to 40 percent.'
The statewide affordability figure hit a 15-year low at 18 percent in June, a nine percent decrease from the previous June.
The lowest housing affordability rate on record for the county was 15 percent, recorded in the summer of 1989, Kleinhenz said.
Kevin Felt can be reached at [626] 962-8811, Ext. 2703, or by e- mail at kevin.felt@sgvn.com .