SLO County has third least affordable housing market in state. How do other spots compare?
If you can’t afford to buy a house in San Luis Obispo County, you’re not alone.
SLO County has the third least affordable housing market in California, according to a news release from the California Association of Realtors (CAR).
The county had a housing affordability rate of 12% in the second quarter of 2022, meaning only 12% of households could afford to purchase a home at the state’s median price of $883,370.
That rate represents a 6% decrease from the previous quarter’s rate of 18% affordability in SLO County.
In contrast, Santa Barbara County had a housing affordability rate of 10% and Mono County had a 6% rate, CAR said.
Overall, housing affordability in California hit a 15-year low in the second quarter of 2022, the CAR release said.
In California, housing affordability declined significantly from 24% in the first quarter of the year to 16% in the second quarter, the group said.
By comparison, national housing affordability dropped to 38% in the second quarter of 2022, according to the release.
Nearly four in 10 households in the United States could afford a $413,500 median-priced home, requiring a minimum annual income of $93,200 to make monthly mortgage payments of $2,330, CAR said.
In April and May 2022, home prices and interest rates “jumped to levels not seen in more than 13 years,” the release said, causing widespread declines in housing affordability in the state.
More than 10 years ago, in the first quarter of 2012, 56% of California households were capable of buying a home at the median sales price, according to CAR.
Now households need to make a minimum annual income of $199,200 to qualify for most mortgages on state median-priced homes.
After making a 20% down payment and securing a 30-year, fixed mortgage, that household would need to make a monthly payment of $4,980, assuming an effective composite interest rate of 5.39%, the release said.
Jennifer Lawson, president of the San Luis Obispo Coastal Association of Realtors, said water availability, a lack of new building in unincorporated areas and, most importantly, a shortage of available inventory may have contributed to the decline in housing affordability in SLO County.
The county has “really low inventory, (but) the demand is still high,” Lawson said. “The (home) sales are kind of flattening at the moment — they’re not going down like the prices, and they’re not going up.”
In the second quarter of 2022, the median home price in SLO County was $900,000, which would require prospective home buyers to make $202,800 a year to qualify.
That’s according to CAR’s Traditional Housing Affordability Index, which the release described as “the most fundamental measure of housing well-being for home buyers in the state.”
Lawson said the median price locally may be even higher than the CAR data suggested. She estimates the median home price in SLO County to be more than $1 million.
High interest rates may also be pricing out some buyers, she said.
“I noticed that my own clients were just like, ‘We can’t afford that payment right now with that new (federal) interest rate,’ so that contributes to it,” Lawson said. “Everyone’s struggling a little bit.”
Lawson said interest rates on home loans will likely continue to rise, making now a good time for potential buyers to lock in a mortgage on a house or a condominium rather than buying above their price range.
She advised buyers to “try not to be too picky” when searching for a new home.
Owning a house is “the American dream, and California is a hard place to enter into that dream,” Lawson said, “but it is doable ...”
This story was originally published August 18, 2022 at 5:00 AM.
