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player ready...Amid signs of a cooling market, housing affordability improved slightly in Los Angeles and all of California during September from the prior month but continued the pattern of falling from year-ago levels, a trade association has said.
Housing prices typically flatten this time of year so affordability should remain in its current range in the fourth quarter, said the California Association of Realtors, and that could offset rising interest rates.
And in a sign that the market is softening, an industry tracker also said lenders are increasing scrutiny of home loan applications in some markets in Central and Northern California.
In September, 13 percent of Los Angeles County residents could afford the median-price home costing $560,990, said the California Association of Realtors. That was 1 percentage point better than August, when the median-priced home cost $564,340.
But it was 4 percentage points less than a year ago, when the median price was $458,590.
The median price is the halfway point between the cheapest and most expensive homes sold.
Affordability in California was 15 percent in September, 1 percentage point better than August but 4 percentage points under the year-ago level.
August’s affordability hit a record low in the county and tied the state record.
In Ventura County, 13 percent of households could afford the median-priced home costing $678,380, unchanged from August and 3 percentage points under the year-ago level.
“It wouldn’t be surprising if we held steady for the time being,” said Robert Kleinhenz, the association’s deputy chief economist.
In September, a California household needed to earn at least $128,270 annually to qualify for a loan to by a home priced at the median of $543,980.
A year ago, when the median price was $463,630, the household income requirement was $107,440.
In contrast, September’s median price nationwide averaged $212,000 and the qualifying income was $49,990.
The High Desert, which includes the Antelope Valley, remained the most affordable region in the state: 26 percent of households could afford a home priced at the median $312,410. The least affordable region was the Northern Wine Country at 7 percent with a $639,390 median price.
John Karevoll, an analyst at La Jolla-based DataQuick Information Systems, said rising interest rates will impact affordability most for entry-level buyers.
Rising mortgage rates and some other signs point to some markets like San Diego and Orange Counties nearing the end of their cycle.
That could also act as a break on falling affordability.
Market watchers have been predicting that price appreciation would cool and sales slow from the record pace earlier in the year, and that appears to be happening.