homebuying affordability gap from the spring. Yes, this past summer produced a slight narrowing of this California-vs.-U.S. If those concerns reappear, the wide cost chasm should be worrisome for California’s housing market. I recall that affordability once seemed to matter. On a scale of zero bubbles (no bubble here) to five bubbles (five-alarm warning) … FIVE BUBBLES! Californians with the nerve to shop in those challenging times enjoyed a market with only 18% less affordability than the nation. That boosted California starter-home affordability to average a lofty 64% vs. Think about what happened in 2008-2012, just before, during and immediately after the ugly housing crash: slashed prices and low rates. So was California affordability ever relatively OK? In 2000-07, California offered 40% less affordability than the nation - not very far from 2021 levels. Let’s politely note that in that troublesome period for housing, a different kind of feeding frenzy set the stage for a horrific real estate flop. So just about anybody could qualify to buy!) (Of course, consider the loose lending terms of this period. Next, look at the bubble-building period of 2000-07 when 43% of Californians could afford a starter home vs. That’s 31% less affordability in the state, a smaller gap with the nation than today.
Let’s start with the recovery from the Great Recession’s housing debacle - 2013-2019: An average 51% of Californians could afford a starter home vs. Yet the swings in these indexes can be worthwhile tools to see longer-term trends. I’m usually not a huge fan of affordability indexes as a measure of how many folks can actually buy a home. That spread can be a critical financial hurdle for folks pondering less-onerous housing deals in other states. A typical California first-time house hunter had 37% less affordability than a U.S. Ponder the gap between state and national costs. California housing ‘affordability gap’ near pre-crash levels Close Menu
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