UPDATED: L.A. County one of the least affordable
by Steven Felschundneff | firstname.lastname@example.org
It’s still cheaper to buy a home than to rent in the majority of the country. But here in Southern California? Not so much.
According to ATTOM Data Solutions’ 2022 Rental Affordability Report, buying a median-priced single family home is more affordable than the average rent on a three-bedroom apartment in 666, or 58%, of the 1,154 U.S. counties included in the analysis.
The company, which curates a large database of economic and real estate information, also concluded that the affordability window is closing fast, with home prices increasing more than average rents and average wages in 88% of the country.
“According to the new ATTOM analysis, renting is more affordable for average wage earners than buying a home in 21 of the nation’s 25 most populated counties and in 35 of 42 counties in the report with a population of 1 million or more,” the company said in a statement.
Still there is some good news in the report — wages are increasing more than average fair-market rents in 637, or 55%, of the 1,154 counties analyzed, including Los Angeles, San Diego and Orange counties.
In L.A County the average weekly wage is $1,400 and the average rent on a three-bedroom apartment is $2,971. That still comes out to about 50% of earnings going toward housing expenses, which is far above the 30% considered to be affordable.
In nearly every California county it is cheaper to rent, with the exception of Siskiyou, Kings and Shasta. Marin County, where one needs to earn 121.9% of average local wages to buy a home, and Santa Cruz County, (112%), are the third and fourth least affordable counties in the nation. Summit County, Colorado, which includes Breckenridge, topped the list at 151.3% of average local wages required to purchase a home.
Los Angeles and Orange are among the five least affordable large U.S. counties, defined as those having a population over 1 million. Orange County came in second, where 87.7% of average local wages was needed to buy a median home price of $940,000. Los Angeles was fifth with a median price of $800,000 taking up 74.7% of earnings.
Using Attom’s methodology, which includes a 3% down payment and private mortgage insurance, a median-priced home in Los Angeles County would typically have a $4,755 monthly payment. Even if the down payment were adjusted to 20%, or $160,000, required for a conventional loan, the monthly payment of $3,696 is still hundreds of dollars more than rent. In calculating the median sales price, Attom only considered single family homes.
Even in the Inland Empire where Southern California home buyers have typically migrated to find affordable housing, it is less expensive to rent than to buy, but by a much slimmer margin. San Bernardino County’s median home price at $425,000 is roughly half of Los Angeles’ median but with average weekly wages at $1,052 and the average three-bedroom rental at $2,242, it is still cheaper to rent. Riverside County is less affordable with nearly identical wages and rent to San Bernardino but with a median home price of $510,000.
With a 3% down payment of $12,000, the monthly payment for that San Bernardino County home would be $2,523 per month, a difference of only $281 over renting. With a 20% down payment of $85,000 that payment drops to $1,961, so it certainly pays to have some money set aside.
Claremont’s median home price is $815,000, a 12% gain over a year ago, according to the year-end real estate snapshot from Ryan Zimmerman of Wheeler Steffen Sotheby’s International Realty. Zimmerman’s data differed from Attom’s in that it includes townhomes and condominiums.
The median is simply the point at which half of the homes sold for more and half sold for less. If one looks at the average price, which is calculated by adding all the sales prices together and dividing by the total number of home sold, the result jumps to $906,156 which is 16.2% over the last year. However, using the average to gauge home values can be misleading because a few very high price sales would tend to draw the average up.
Looking at a popular website which provides access to local real estate listings, there is not a lot of selection, with just 14 current listings including three townhomes ranging in price from $440,000 to $730,000 and 11 single family homes priced from $750,000 to $3.98 million. Just one home is priced slightly over the median at $825,000 for a four-bedroom, two-bath, 1,512 square foot home on Virginia Road in south Claremont. The home, which sold in July for $615,500, has recently been remodeled and relisted for sale.
Three homes sold over the previous three months at or near the median including a two-bedroom, two-bath 1,512-square-foot home on Florac Avenue that sold for $788,000; a recently remodeled three-bedroom, two-bath 1,185-square-foot home on Villanova Drive at $810,000 and another three-bedroom, two-bath home on Towne Avenue which is 1,680 square feet and is priced right at the median at $815,000.