CALIFORNIA on the cheap: Where are CALI ‘bargains’ for home shoppers?

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High affordability is in sparsely populated corners of the state

FROM: THE PRESS ENTERPRISE / www.pressenterprise. com (VIA Orange County Register & Southern California News Group) By Johnathan Lansner

Buzz: You can find California housing with pricing that requires a proportional size of income on par with what is needed by the typical new U.S. house hunter. But those “bargain” homes are located in sparsely populated parts of the state.

Source: My trusty spreadsheet reviewed the California Association of Realtors’ first-time homebuyer affordability index to find housing bargains in 51 counties for 2022’s fourth quarter. The Realtors’ benchmark looks at the monetary burden of buying using more generous financing math than other indexes.

Topline: The best bargains as measured by this affordability yardstick are for the folks in Northern California counties of Lassen (where 72% can afford to buy) and Shasta (57%) and mid-state Kings County (58%). The trio had affordability levels at or above the nation’s 57% rate.

And where were the priciest counties, on this scale? Mono (18% affordable), Santa Cruz (21%), and Santa Barbara (24%).

Bottom line: Affordability tumbled last year as stubbornly high prices combined with rising mortgage rates. As a result, few house hunters could qualify for a home loan and sales activity plunged in 2022’s second half.

Ponder California’s “affordability” at 34% for a first-timer in the fourth quarter. That was down from an average 38% in 2022’s first nine months as the Federal Reserve ended its cheap money policies as upped interest rates. Affordability statewide averaged 45% in mid-pandemic 2020-21 and 49% in 2015-19, before the coronavirus twisted the economy.

Yes, homes are more affordable nationally, but the downward slope is similar. The year-end 57% U.S. affordability rate compares to 61% during the previous nine months, 69% in 2020-21 and 72% in 2015-19.

The numbers

When looking only at the state’s 12 most-populous counties, you also see “bargains” are concentrated in inland California. Here’s how the dozen big housing markets ranked in order of affordability …

San Bernardino: 51% of first-time shoppers could afford a local home in the fourth quarter vs. an average 55% in last year’s first nine months. That’s also below the 64% average of 2020-21 and 69% in 2015-19.

Fresno: 50% fourth quarter vs. 52% previous nine months, 62% in 2020-21, 65% in 2015-19.

Kern: 49% fourth quarter vs. 54% previous nine months, 64% in 2020-21 and 70% in 2015-19.

Sacramento: 49% fourth quarter vs. 51% previous nine months, 59% in 2020-21 and 63% in 2015-19.

Contra Costa: 44% fourth quarter vs. 46% previous nine months, 51% in 2020-21 and 55% in 2015-19.

Riverside: 43% fourth quarter vs. 46% previous nine months, 55% in 2020-21 and 59% in 2015-19.

San Diego: 31% fourth quarter vs. 34% previous nine months, 44% in 2020-21 and 47% in 2015-19.

Alameda: 30%  fourth quarter vs. 30% previous nine months, 38% in 2020-21 and 41% in 2015-19.

Los Angeles: 28% fourth quarter vs. 34% previous nine months, 41% in 2020-21 and 46% in 2015-19.

Santa Clara: 28% fourth quarter vs. 27% previous nine months, 34% in 2020-21 and 37% in 2015-19.

San Francisco: 27% fourth quarter vs. 27% previous nine months, 28% in 2020-21 and 25% in 2015-19.

Orange: 24% fourth quarter vs. 26% previous nine months, 37% in 2020-21 and 42% in 2015-19.

Written by Jonathan Lansner for the Southern California News Group
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THE HOUSING MARKET: With Drastic Changes For Buyers— Experts Give Advice On How to Adapt

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The COVID-19 pandemic irrevocably transformed the home-buying process. Housing prices surged at record prices. Buyers frequently took part in tense bidding wars as soon as limited inventory became available. Cash buyers became more common, despite high rates of unemployment. The historically low mortgage rates also created a red-hot market, with houses sold within hours, contingencies waived across the board, and closing prices soaring well above asking. With the continuous increase in global inflation, 2022 has also revealed new realities. The Federal Reserve scaled back early pandemic relief and interest rate hikes have caused mortgage rates to rise.

If you’re currently looking for a home in this market, or planning to buy in 2023, there are new rules to the road. Some say things are headed back to their pre-2019 norm, but others say that iBuyers and cash companies have changed the residential real estate market forever. Below, real estate experts from around the country offer insight on how the market has changed and how buyers should get ahead of any sudden challenges to come. 

Has the housing market changed in your area over the last year? 

No matter where you live, the answer to this question is “yes.” In 2022, high inflation, recession fears, and high mortgage rates were expected to force home prices lower, but the last twelve months were a roller coaster. The April 2022 quarterly forecast by Freddie Mac (The Federal Home Loan Mortgage Corporation) stated that mortgage rates were expected to average 4.6 percent for calendar year 2022. Yet, on December 8, 2022, the National Association of Realtors (NAR) reported that rates dropped from 6.59 percent to 6.33 percent, just a week before. The NAR predicts that “mortgage rates may stabilize near 6 percent in 2023.” Thus, prospective home buyers should expect more affordability in the future, just not as much as they’d hoped for at the start of 2022. So, what does this really mean for those hunting for their dream home in this bear market? Below, experts answer the most common questions buyers have these days.

Is there more inventory now?

After hitting record lows in 2021 and early 2022, housing inventory has started to increase. However, the market is still quite competitive. “Inventory remains limited and desirable neighborhoods continue to see competitive listings selling for 30 percent above list price,” says Megan Micco, a San Francisco Bay Area real estate agent. “The days of waiving all buyer contingencies is nearly over, and buyers have comparatively less purchasing power due to increased mortgage interest rates.” According to a study by online real estate brokerage Redfin, as of June 2022, a homebuyer on a $2,500 monthly budget had lost nearly $120,000 in spending power since the end of 2021 as mortgage rates have nearly doubled.

With this in mind, New Jersey based broker-associate Michelle Mumoli cautions buyers not to get too confident just yet. “Although inventory still is exceptionally low, buyers still think they can get a ‘deal,’” Mumoli says. “Unfortunately, there are none to be had.”

That said, Mumoli encourages motivated buyers to act, rather than sit on the sidelines and wait for prices to go down. “Prices of homes will continue to increase in value,” she says. “Homes in highly sought locations are still selling higher than asking because of location, proximity to [cities], schools, uniqueness factor, land, etc.”

How fast do you have to make an offer on a property you like?

“Nine months ago, sellers could stick a sign in the yard and sell their house in a weekend with multiple offers, many of which were over asking price—with zero contingencies,” says Tanya Salseth of Stateside Residential in Annandale, Virginia. In this way, the pendulum has swung back in buyers’ favor. She says buyers can—once again— negotiate home inspections, appraisals, and financing contingencies. In her experience, some buyers have even successfully gotten motivated sellers to buy down interest rates or contribute to closing costs. In this more balanced market, motivated sellers are willing to be more flexible than they were last year.

Are there any hidden advantages to buying a house now? 

A house represents the largest single purchase most people will make in their lifetime. Hence, it is a highly personal decision, and its advantages are equally as unique. Trying to time the market for the biggest financial benefit is a stressful and often faulty strategy. Instead, it’s best to work with a reputable agent who can scout opportunities based on your budget and needs. 

Micco says, in the Bay Area, there are several advantages to purchasing a home right now. There are relatively few buyers in the market, so competition is low. “Just last week I wrote a winning offer on a property that had been on the market for more than 30 days, had 30 disclosure packages out, and we submitted the only offer,” she shared.

Salseth echoes that she’s seeing less competition and lower asking prices in the national capital region. “Sellers who have benefited from significant appreciation can dip into their equity to make the deal work for the buyer and get their house sold,” explains Salseth, who said these kinds of moves were extremely rare earlier in 2022.

How long should you wait to buy?

This is largely dictated by personal circumstance, but real estate is a fast-paced business. “If the monthly numbers don’t make sense for a purchase, wait,” advises Salseth. But once you let something pass you by, you can’t expect to see it again (or anything like it) anytime soon. If you can manage the FOMO, it is best to wait for a house that you can afford and that truly meets your needs—rather than end up responsible for a home that just doesn’t work for you.

How should you adapt your strategy as a home buyer?

Mumoli says to start by being realistic and keeping yourself up-to-date on the reality of the housing market. Seasoned realtors can help you find something that aligns with your needs, but their advice might run contrary to what you’re seeing on reality tv shows or home buying blogs.

If your goal is to become a homeowner, Micco says it’s best to let go of the “forever home” dream and look for a “starter home” instead. “There are opportunities to get into a ‘starter home’ at an affordable price and then leverage the equity you’ve built in that property to move to a bigger and better home in the future,” she says. “Of course, purchasing a home is an emotional decision, but don’t forget to think of it as a long-term investment. You wouldn’t think about buying your ‘forever stock’ and never buying a share of stock again, so take a similar approach to your home.”

Last, the part of the process that most people underestimate is securing the right financing for your purchase. “Adjustable-rate mortgages (ARMs) got a bad rap during the housing downturn in 2007-2008, but most would-be purchasers don’t plan to stay in their home for 30 years,” highlights Salseth.

Since the average homeowner stays in their home for anywhere from eight to 13 years, Salseth says that ARMs can help homeowners save hundreds of dollars per month compared to 30-year fixed mortgages. If you know you’ll move again in the next five to 10 years, you’d do well to consider and compare all types of available financing.

Again, the home buying process is a personal and emotional journey, but it will benefit you today and in the future to get clarity on how your personal needs match up with market conditions.


Confused about the housing market? Here’s what’s happening now – and what could happen next

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The slowdown in the otherwise red-hot housing boom has been stunningly swift.
The U.S. housing market surged during the pandemic as homebound people sought new places to live, boosted by record-low interest rates.

Now, real estate agents who once reported lines of buyers outside open houses and bidding wars on the back deck say homes are sitting longer and sellers are being forced to lower their sights.

That has both potential buyers and sellers wondering where they stand.

“As recession concerns weigh on consumer outlooks, our survey shows uncertainty has made its way into the minds of many buyers,” said Danielle Hale, chief economist at

Here are the major factors behind the topsy-turvy housing market.

The slowdown in the otherwise red-hot housing boom has been stunningly swift.

The U.S. housing market surged during the pandemic as homebound people sought new places to live, boosted by record-low interest rates.

Now, real estate agents who once reported lines of buyers outside open houses and bidding wars on the back deck say homes are sitting longer and sellers are being forced to lower their sights.

That has both potential buyers and sellers wondering where they stand.

“As recession concerns weigh on consumer outlooks, our survey shows uncertainty has made its way into the minds of many buyers,” said Danielle Hale, chief economist at

Here are the major factors behind the topsy-turvy housing market.

Mortgage Rates

The main driver of the slowdown is rising mortgage rates. The average rate on the 30-year fixed mortgage, which is by far the most popular product today, accounting for more than 90% of all mortgage applications, started this year right around 3%. It is now just above 6%, according to Mortgage News Daily.

That means a person buying a $400,000 home would have a monthly payment about $700 higher now than it would have been in January.

High prices, low supply

The other drivers of the slowdown are high prices and low supply.

Prices are now 43% higher than they were at the start of the coronavirus pandemic, according to the S&P Case-Shiller national home price index. The supply of homes for sale is growing, up 27% at the start of September compared with the same time a year ago, according to While that comparison seems large, it’s still not enough to offset the years-long shortage of homes for sale.

Active inventory is still 43% lower than it was in 2019. New listings were also down 6% at the end of September, meaning potential sellers are now concerned as they see more houses sit on the market longer.

Paul Legere is a buyer’s agent with Joel Nelson Group in Washington, D.C. He focuses on the competitive Capitol Hill neighborhood, and he said he saw listings jump by 20 to 171 just after Labor Day. He now calls the market “bloated.” As a comparison, just 65 homes were listed for sale in March.

“This is a very traditional post Labor Day inventory bump and seeing in a week or so how the market absorbs the new inventory is going to be very telling,” he said. “Very.”

Inventory is taking a hit nationally because homebuilders are slowing production due to fewer potential buyers touring their models. Housing starts for single-family homes dropped 18.5% in July compared with July 2021, according to the U.S. Census.

Homebuilder sentiment in the single-family market fell into negative territory in August for the first time since a brief dip at the start of the pandemic, according to the National Association of Home Builders. Builders reported lower sales and weaker buyer traffic.

“Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession,” said NAHB Chief Economist Robert Dietz in the August report. 

 Some buyers are hanging in

Buyers, however, have not disappeared entirely, despite the still-pricey for-sale market and the equally expensive rental market.

“Data indicates that some home shoppers are finding silver linings in the form of cooling competition for rising numbers of for-sale home option,” said’s Hale. “Especially for buyers who are getting creative, such as by exploring smaller markets, this fall could bring relatively better chances to find a home within budget.”

Home prices are finally starting to cool off. They declined 0.77% from June to July, the first monthly fall in nearly three years, according to Black Knight, a mortgage technology and data provider.

While the drop may seem small, it is the largest single-month decline in prices since January 2011. It is also the second-worst July performance dating back to 1991, behind the 0.9% decline in July 2010, during the Great Recession.

Affordability woes

Still, that drop in prices will do very little to improve the affordability crisis brought on by rising mortgage rates. While rates fell back slightly in August, they have risen sharply again this week, making for the least affordable week in housing in 35 years.

It currently takes 35.51% of median income to make the monthly principal and interest payment on the median home with a 30-year mortgage and 20% down. That’s up marginally from the prior 35-year high back in June, when the payment-to-income ratio reached 35.49%, according to Andy Walden, vice president of enterprise research and strategy at Black Knight.

In the five years before interest rates began to rise, that income-to-payment ratio held steady around 20%. Even though home prices surged in the 2020 and 2021, record-low interest rates offset the increases.

“Given the large role affordability challenges appear to be playing in shifting housing market dynamics, the recent pullback in home prices is likely to continue,” Walden said.

A new report from real estate brokerage Redfin showed that while homebuyer demand woke up a bit in August, the latest increase in mortgage rates over the past week put it right back to sleep. Fewer people searched for “homes for sale” on Google with searches during the week ending Sept. 3 – down 25% from a year earlier, according to the report.

Redfin’s demand index, which measures requests for home tours and other home-buying services from Redfin agents, showed that during the seven days ending Sept. 4, demand was up 18% from the 2022 low in June, but still down 11% year over year.

“The housing market always cools down this time of year,” said Daryl Fairweather, Redfin’s chief economist, “but this year I expect fall and winter to be especially frigid as sales dry up more than usual.”


When Will Home Prices Fall? Here’s What Experts Predict


Soaring mortgage rates, tremendous demand and limited inventory are pushing home prices up, but some experts say relief is on the way. Just not in the near future.

Home prices grew 20.6% year-over-year in March, the fastest annual surge in 35 years, according to a report released Tuesday by S&P Global. In some cities, that number is even higher: Tampa (34.8%), Phoenix (32.4%) and Miami (32.0%) saw the largest price gains.

The data, which comes from S&P’s CoreLogic Case-Shiller Index, tracks the value of single-family housing in the U.S.

It gets reported on a two-month delay, and prices continued to rise beyond the month of March, albeit at a slower pace. The median sales price of an existing home (not new construction) in April was $391,200, according to data from the National Association of Realtors (NAR). That’s 14.8% higher than in April 2021.

Experts generally agree that prices this high, combined with mortgage rates above 5% and soaring inflation, are not sustainable in the long term, since they price so many buyers out of the market. Soon, sellers will have to adjust.

“As buyer confidence sags and weighs down demand, real estate markets will re-balance, eventually tilting away from the heavy advantage that recent home sellers have enjoyed,” Chief Economist Danielle Hale wrote in a blog post this week.

When will home prices fall?

Nearly 20% of sellers dropped their prices during the four weeks ending on May 22, according to data from Redfin. But that doesn’t mean that houses are getting more affordable just yet.

Because mortgage rates are so high, the monthly payment on a home listed at the median asking price was $2,425 during that same period — $717 higher than a year prior.

Buyers looking for newly built homes also face historically high construction costs thanks to supply chain issues and material shortages.

Mark Zandi, the chief economist at Moody’s Analytics, predicts prices will eventually flatten across most of the country, especially in the hottest housing markets of the pandemic era — like Boise, Colorado Springs, Las Vegas and Phoenix.

“Sky-rocketing house prices are set to come back to earth as higher rates crush affordability,” Zandi tweeted last week.

For now, those waiting to buy until the market cools will have to keep biding their time.

“Although one can safely predict that price gains will begin to decelerate, the timing of the deceleration is a more difficult call,” Craig Lazzara, Managing Director at S&P Dow Jones Indices, said in a news release.

Written by Sarah Hansen for

THE BIZ: The housing market hits a level not seen since the last bubble



You’d be hard-pressed to find housing economists proclaiming that the ongoing housing boom is nearing a 2008-type bust. In fact, many say the opposite, based on the belief that the demographic wave of millennial first-time homebuyers, elevated wage growth, and limited supply will all continue pushing the market upwards. Every major real estate firm with a publicly available forecast, including CoreLogic and Fannie Mae, predicts that home prices will go even higher over the coming year.

That said, the red-hot U.S. housing market is beginning to hit levels not seen since our last housing bubble.

Black Knight, a mortgage technology and data provider, showed Fortune an analysis on Friday that finds the typical American household would now have to spend 31% of their monthly income to make a mortgage payment on the average-priced U.S. home. That’s up from 29% just one week earlier, and up from 24% in December. Black Knight’s mortgage-payment-to-income ratio—which averaged 19.9% during the 2010s decade—hasn’t topped 31% since September 2007.

What’s going on? The economic shock caused by soaring mortgage rates over the past few weeks has dramatically increased mortgage payments for new homebuyers.

Back in December, the average 30-year fixed mortgage rate stood at 3.11%. A borrower taking on a $500,000 mortgage at that rate would owe $2,138 per month. Now that the average rate is at 5%, that loan if issued today would cost $2,684 per month. Over the course of the 30-year loan, that’s an additional $196,700.

In March, a team of researchers at the Federal Reserve Bank of Dallas got the attention of the real estate industry after publishing a paper titled Real-time market monitoring finds signs of brewing U.S. housing bubble. They found that recent U.S. home-price growth—which is up 19.2% over the past 12 months—is once again becoming “unhinged” from economic fundamentals.

However, the Dallas Fed researchers don’t see this as a 2008 repeat. Sure, many new homebuyers are getting stretched financially in a way that resembles buyers during the last bubble. But that’s just new homebuyers. If you look broadly at homeowners, they’re doing quite well.

As of the fourth quarter of 2021, only 3.8% of U.S. disposable personal income was going toward mortgage debt payments. At the height of the 2000s housing bubble, that figure was nearly double at 7.2%. This time around, households’ balance sheets look healthier, and more homeowners have paid off their mortgage altogether. In addition, the shady lending practices of the aughts were regulated out of the market by the 2010 Dodd-Frank Act. Simply put: If a storm does come, homeowners, in theory, should be better positioned to ride it out.

“Based on present evidence, there is no expectation that fallout from a housing correction would be comparable to the 2007–09 global financial crisis in terms of magnitude or macroeconomic gravity. Among other things, household balance sheets appear in better shape, and excessive borrowing doesn’t appear to be fueling the housing market boom,” write the Dallas Fed researchers.

It’s possible the affordability crunch created by soaring mortgage rates could be a good thing. That’s according to Logan Mohtashami, lead analyst at HousingWire. Spiking mortgage rates, he says, could take some steam out of the market and give inventory a chance to rise a bit. If that happens, it could slow down the rate of home price appreciation and reduce the likelihood of the red-hot housing market culminating in an overheated market—or even worse, a housing bust.

“Higher mortgage rates are the best thing for housing because we are in a savagely unhealthy housing market, and we need to get off these extreme low levels of inventory,” Mohtashami told Fortune. “It isn’t too much or bad credit chasing homes this time around. It’s too many people chasing too few homes. We desperately need a breather.”

According to Redfin, spiking mortgage rates are already softening the housing market a bit. The brokerage platform is seeing slightly more home listings with price cuts and fewer bookings for home showings. However, we’ll need to wait a few weeks—or months—before we can be sure that the housing market is actually softening.

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