Industry Update: the Future of eClosing and RON

Join industry experts for an in-depth discussion on the future of eClosing and how hybrid and RON closings benefit lenders and borrowers.

DOJ v. NAR and the ethics of real estate commissions

Today’s HousingWire Daily features the first-ever episode of Houses in Motion. We discuss the Department of Justice’s recent move to withdraw from a settlement agreement with the NAR.

Hopes for generational investment in housing fade in DC

Despite a Democratic majority, the likelihood of a massive investment in housing via a $3.5 trillion social infrastructure package appears slim these days. HW+ Premium Content

Road to the one-click mortgage

This white paper will outline how leveraging a credential-based data provider can save money for lenders, reduce friction for borrowers, speed time to close, and overall bring lenders one step closer to a one-click mortgage.

MortgageReal Estate

Zillow: California’s expensive housing market even prices out the rich

Californians typically spend more than 30% of their income on housing

California’s housing market is so large that it now accounts for a third of the nation’s housing market value.

In fact, since February 2012, California’s housing value has climbed a whopping $3.7 trillion, ushering millions of homeowners into its rich market.

But as affordability concerns impact metros across the country, new data from Zillow suggests that not even high-income households can keep up with the Golden State’s outrageous home prices.

“Even if they were to theoretically put no money down to purchase the median-valued home, a homebuyer in 22 of the country’s 35 largest metro areas could still make their monthly mortgage payments without spending more than 30% of their income on housing. But not in California,” Zillow writes.

According to the company’s analysis, the cost of housing in most major California metros has risen so high that the median household cannot reasonably afford a median-priced house, even with a 20% down payment.

Furthermore, to make ends meet on their monthly mortgage, the average California household would either need to spend far more than 30% of their income on housing or exceed the standard 20%.

“Median annual household incomes in the pricey San Jose and San Francisco metros sit far above most areas: $124,300 and $107,600, respectively, compared to the national median of $63,300 per year,” Zillow writes. “But that extra income is not enough to compensate for incredibly high local home values – the median home in San Jose has a value of $1.25 million, and in San Francisco it’s worth $957,400.”

Zillow notes that even after a homebuyer puts 20% down, the $4,900 monthly payment in San Jose and $3,760 payment in San Francisco still ends up consuming more than 30% of the typical household’s income.

“To bring that monthly payment in San Jose down to $3,108 per month – within the 30% threshold – a homebuyer making the median income in the San Jose metro would need to make a ludicrous down payment of almost 50%, or $614,100, on the median-valued home,” Zillow writes. “To put that in perspective, the required down payment alone is more than the combined values of a high-priced home in Kansas City ($336,200) and Pittsburgh ($266,800) – to say nothing of the entry-level or even median home in those areas.”

Notably, even Silicon Valley homebuyers are priced out, as affording the typical entry-level home in San Jose is nearly out of reach for a median-earning household.

In fact, the largest loan Silicon Valley homebuyers could afford without crossing the 30% barrier would be $631,700, which is 80% of the typical entry level home value of $791,500, and still requires a substantial 20% down payment of $159,800 up front, according to Zillow. 

Most Popular Articles

Are we back to a normal housing market?

Favorable demographics should keep the housing market ticking. But watch for home prices escalating out of control and rates moving up sharply, writes columnist Logan Mohtashami. HW+ Premium Content

Jul 26, 2021 By

Latest Articles

FHA introduces simplified COVID-19 recovery “waterfall”

The FHA is scrapping its old “waterfall” framework and providing two loss mitigation options for mortgage servicers who are processing borrowers exiting forbearance

Jul 28, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please