The rising cost of housing in California is dramatically outpacing income growth, resulting in increased monthly payments that now take up a larger portion of household incomes.
To restore affordability, mortgage rates need to fall to 3.5%, incomes would have to increase by 50%, or home prices must decrease by 33%. Any combination of these would help.
The pandemic significantly changed the housing landscape, with stimulus checks, a demand for more living space, and historically low mortgage rates largely driving up home prices.
In eight out of ten major California metros, home values have increased significantly compared to much slower income growth, highlighting an alarming trend in housing affordability.
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