Orange County’s housing prices continue to soar, with a new study revealing that residents in the area who wish to purchase a home need to have an annual income of nearly $350,000.
The California Association of Realtors points out that Orange County is among the least affordable areas in California for homebuyers. Data shows that to buy a property at the median price in Orange County, an annual income exceeding $349,000 is required, with the median price for local properties nearing $1.4 million.
The report further indicates that only 11% of Orange County residents have sufficient income to support homeownership expenses. Analysts calculated these figures assuming buyers could make a down payment of around 20%, approximately $275,000.
Across the United States, the annual income needed to purchase a home at the median price is around $99,000, with a price of approximately $389,000.
Since the beginning of 2020, U.S. housing prices have risen by a staggering 47.1%, far exceeding records from the past few decades.
These conclusions are drawn from the latest analysis by ResiClub based on the Case-Shiller national home price index, which indicates that during the 1990s and 2010s, U.S. house prices increased by 30.1% and 44.7%, respectively.
According to a report by FOX11, years of insufficient housing construction have led to a shortage of homes in the United States, a problem exacerbated by rapid increases in mortgage rates and rising building material costs.
An independent report released by Realtor.com highlights that the current housing supply in the U.S. has plummeted by a staggering 34.3% compared to normal levels before the COVID-19 outbreak in early 2020.
The past three years have seen an increase in mortgage rates, leading to what experts call the “golden handcuffs” effect in the housing market. Sellers who locked in historically low rates of 3% or lower at the onset of the pandemic are reluctant to sell, further limiting market supply and leaving prospective homebuyers with very few options.
Economists predict that in 2024, mortgage rates will remain high and are only expected to gradually decrease once the Federal Reserve begins to cut rates. However, rates are unlikely to drop back to the levels seen during the pandemic. Additionally, due to unexpected inflation data early in the year, investors are skeptical about the possibility of Fed rate cuts.
Mortgage institution Freddie Mac recently reported that the average rate for a 30-year loan has fallen to 7.09%. While this figure is lower than the peak rate in the fall of 2023 (7.79%), it still remains high compared to the low 3% rates during the pandemic period.
Another survey by Redfin found that due to persistently high mortgage rates and continuously soaring housing prices, the median monthly payment for a property has reached a record $2,775, reflecting an 11% increase from the same period last year.
Ben Ayers, a senior economist at Nationwide, points out that homebuyers still face challenging market conditions, with scarce housing inventory and rising homeownership costs. Despite solid demand supported by demographics and a strong labor market, many first-time homebuyers are unable to enter the market due to high financing rates and escalating house prices.