Looking for the cause behind SoCal’s home sales slowdown? Blame a record house payment of more than $3,300 to buy a typical home – a $1,000 increase from a year ago.
The brake on Southern California home sales to the lowest level in 27 years can be attributed to a 46 percent jump in house payments led by rising mortgage rates, the Orange County Register reported.
Stubbornly high home prices combined with higher mortgage rates tied to the Federal Reserve’s battle against inflation has turned a real estate bidding war into a real estate No Man’s Land.
July home sales fell 35 percent from last year to 16,390 transactions, the lowest level since 1995.
It now takes a monthly payment of $3,319 to pay for the $740,000 median-priced home in six Southern California counties, according to a Register analysis. And that’s without factoring in property taxes, association dues or insurance.
A local buyer’s estimated monthly payments rose by $1,044 — a 46 percent jump — from July of last year.
The calculations include an assumed 20 percent down payment of $148,000 – nearly $12,000 more than a year ago.
The pain for buyers was compounded by homes across the region costing 9 percent more than a year ago.
With mortgage rates rising to 5.39 percent for an average 30-year rate from 2.94 percent a year earlier, a home buyer’s borrowing power fell 25 percent in 12 months — the largest drop since 1980, according to the Register.
Only 17 percent of residents in the metropolitan Los Angeles market could afford to buy a typical $800,000 home in the second quarter ending in June, compared to 24 percent a year ago, according to a just-released report by the California Association of Realtors. That assumes a minimum qualifying income of $180,400 a year, and a monthly payment of $4,510.
— Dana Bartholomew
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