Los Gatos Weekly Times

Housing affordabil­ity worsened in 2021 amid skyrocketi­ng home price growth

- By Rose Meily

According to the California Associatio­n of Realtors, housing affordabil­ity deteriorat­ed in 2021 largely due to double-digit home price growth that occurred during the COVID-19 crisis. By ethnic groups, more than one-third of white households and less

than one in five Black and Latino households could afford the same medianpric­ed home.

According to C.A.R.’S Housing Affordabil­ity Index, only about one-fourth or 26% of all California­ns could afford to purchase a statewide median-priced home in 2021, down from 28% in 2020. The index measures the percentage of households that can afford to purchase a median-priced, single-family home in California.

In 2021, a minimum annual income of $144,400 was needed to qualify to purchase a

$786,750 median-priced single-family home in the state. The monthly payment, including principal, interest, and taxes on a 30-year fixed rate mortgage at a 3.16% interest rate would be $3,610.

By ethnic groups, housing affordabil­ity for white/non-hispanic households fell from 38% in 2020 to 34% in 2021. Just 17% of Black and Latino households could afford the median-priced home in 2021, down from 19% and 20% in 2020, respective­ly. Forty percent of Asians could buy a median-priced home, down from 43% in 2020.

The 2021 California median income for whites was $102,540, $116,060 for Asians, $71,120 for Hispanics/latinos and $61,740 for Blacks - a more than $20,000 income gap between the overall population. The affordabil­ity gap is especially stark in expensive counties like San Francisco, where a median-priced home of $1,825,000 was only affordable for 10% of Black households, 17% of Latino households, 24% of Asian households and 37% of white households.

In Santa Clara County, 23% of households earned a minimum qualifying income of $301,200 to purchase a $1,640,000 median-priced home in 2021, with a monthly mortgage payment of $7,530. By ethnic groups, 35% of white/non-hispanic households could afford a median-priced home, 40% of Asian households, 15% and

14% of Latino and Black households, respective­ly.

In San Mateo County, 20% of households could afford to purchase a $2,020,000 medianpric­ed home in 2021, with a minimum qualifying income of $370,800 and a monthly payment of $9,270. By ethnic groups, 34% of white/ non-white households could purchase a medianpric­ed home, 33% Asian, 15% Hispanic, and 17% Black households.

“Even with interest rates remaining at record lows, housing affordabil­ity did not improve in 2021. It’s a grave concern that as prices of homes in the Bay Area and other parts of California continue to rise more than wages, the homeowners­hip gap among ethnic groups, especially for Black and Latino households, could worsen as we see interest rates rise further this year,” said Brett Caviness, president of the Silicon Valley Associatio­n of Realtors.

Of the major regions, San Bernardino (41%), Riverside (37%), and Kern counties (37%) were the most affordable areas for Black households, while San Bernardino (49%), Fresno and Solano (both at 40%) were the most affordable for Hispanics/latinos.

For white and Asian households, Orange County was the least affordable with 25% and 22%, respective­ly, while Kern was the most affordable at 56% for whites and 65% for Asians.

Informatio­n provided in this column is presented by the Realtor members of the Silicon Valley Associatio­n of Realtors at www.silvar.org. Send questions on any topic to rmeily@silvar.org.

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