California house hunters face record $4,359 monthly payment

“Numerology” tries to find reality within various measurements of economic and real estate trends.

Buzz: A California house hunter has to find a record-high $4,359 monthly payment to buy the median-priced single-family home.

Source: My trusty spreadsheet analyzed the California Association of Realtors statewide homebuying data for July and its database of stats dating to 1990.

Fuzzy math: Sales of existing, single-family houses dropped to a 277,000-a-year pace – 13th slowest on record.

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So, how did this yardstick for California house payments get so high — for the second month in a row?

First, there’s the $832,340 median selling price in July, the eighth highest as tracked by Realtors. Even though it was down 1% for the month, it’s essentially flat over the last 12 months after recovering from an 18% crash between May 2022 and February 2023.

Plus, note that mortgage rates skyrocketed to an average 6.84% for 30-year home loans in July. That’s well above 5.41% a year ago and the 5.96% average since 1990. (Note: Rates hit a 21-year high of 7.09% on August 17!)

Assuming current rates along with a 20% downpayment, buyers get an estimated $4,359 house payment. That’s up 1% in a month, up 17% in a year – and up 110% since February 2020, just before coronavirus upended the economy. Yes, more than double.

And that assumption of a 20% downpayment means our hypothetical buyer also has to have $166,000 in spare cash to make the purchase pencil out, which is no small sum.

Details

Only 16% of California households could qualify to purchase a median-priced single-family home in the second quarter, according to a Realtor affordability index.

That’s why the statewide sales pace is 9% slower than a year ago and 34% below the 34-year average.

Even many current owners can’t afford to buy at today’s prices. So, they stay put and don’t list their homes for sale.

As a result, statewide supply has only been lower in six other months since 1990, my spreadsheet estimates. California listings are down 27% in a year and 68% below the 34-year average.

And it’s also clear most successful buyers are those with deep pockets who seem in a hurry to make a deal.

Selling speed has quickened. The typical listing is on the market for just 16 days, the 32nd lowest level over the past 34 years. Time on the market is down 11% in a year, and down 62% vs. the average of 42 days since 1990.

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