Sometimes you absolutely don’t want to be #1. As A Carlsbad Realtor, when it comes to ranking the least affordable housing markets in our country, I do not want to see the San Diego area at the top. Thankfully, we are not. According to the most recent quarterly survey from the NAHB/Wells Fargo Housing Opportunity Index, we are the 12th least affordable. Of course, prices vary drastically across the county so if this were broken down to the city or zip code level, many would be more affordable, some even less.
Per the November 25 San Diego Union Tribune article “San Diego housing affordability up slightly in 3rd quarter,” 226 housing markets were surveyed. Housing affordability measures the degree to how much a typical local family can afford the monthly mortgage payments of a typical local home. Interest rates, median home prices and median incomes are part of the equation. Higher % affordability simply means more families can afford to purchase. New York was the least affordable at 22.6%. Kokomo, Indiana, was the most affordable at 96.1%. I’m pretty sure this is not the same Kokomo The Beach Boys sang about.
San Diego’s current affordability is 51.1%. This is a vast improvement from back in 2005 when San Diego was the 7th least affordable at 3.6%. Still, at one point last year San Diego dropped to 25th on the list and affordability got up to 58.8%. Affordability usually trends down as prices increase and that’s what has happened to our median price since 2009.
Nationally, affordability was 72.1%. Nationally, the median home price, $180K, is much lower than San Diego, $325K in the third quarter. Still, San Diego’s median family income, $75,500, is not dramatically higher than the $64,400 national figure.
How affordable the San Diego housing market remains will be based on which direction home prices go, assuming interest rates and incomes remain steady. Rising prices = lower affordability. Dropping prices = higher affordability. Rising prices, although they technically lower affordability, are usually a sign of a better market to come. As a Carlsbad Realtor and area homeowner, that one gets my vote.