California home prices are trending upward, but their values are expected to appreciate at a slower rate, industry analysts say.
Fewer people can afford the median price of an existing single-family home in California, because home prices continue to inch upward.
The California Association of Realtors published a housing affordability index to illustrate the point. Here are the facts you need to know, as of third quarter 2013:
Median home price: $433,940
Minimum income needed to qualify: $89,170
Assumed monthly mortgage payment: $2,230
Source: California Association of Realtors
About 32 percent of home buyers statewide can afford that price, down from 36 percent in the beginning of the year and 49 percent the same time last year, according to CAR. The median home price was $339,930 in third quarter 2012.
The mortgage for a 30-year fixed-rate loan is based on an effective composite interest rate of 4.36 percent. That’s a huge jump — a full percentage point — from 3.64 percent in the second quarter.
The reasons? A low housing supply translates into high demand. More people bidding on a home equals competition.
In the Coachella Valley, home prices aren’t nearly as high as the state median. As of September, the median price for an existing single-family home was $255,000, according to DataQuick, a real estate information services firm.
But agents, buyers and sellers here are feeling the squeeze, too. As soon a house gets listed for a good price, a handful of interested buyers, as many as four or five, will put in bids, agents told me over the last month.
Nationwide, home values are expected to end this year at a 6.7 percent appreciation rate. From there, the rate drops off.
Values are projected to slow to 4.3 percent next year, gradually falling to 3.4 percent by 2013, according to a Zillow survey of more than 100 economists and other real estate experts.
Zillow chief economist Stan Humphries called rising home prices a “breakneck appreciation” and that cooling off is much-needed.
Business reporter Dominique Fong can be reached at (760) 778-4661, firstname.lastname@example.org and on Twitter @dominiquefong.