This week's LA Times article, "Rising home prices, mortgage rates leave many unable to buy" is off the mark. It begins by explaining, "(j)ust 44% of California residents could afford the median-priced home in the first quarter, a real estate group's index says."
This is a classic case of the danger of looking at a few data points rather than a longer-term trend. The real estate index that the article refers to CAR's Traditional Housing Affordability Index, includes data going back to 1988. Looking at the index, it is clear that while California homes are less affordable than they were at the most recent bottom in 2012, they remain more affordable then at any other time. According to the index, besides 2012, the closest that homes have ever come to being as affordable as they are now was in early 1994. At that time 43% of Californians could afford the median-priced home.
This is a classic case of the danger of looking at a few data points rather than a longer-term trend. The real estate index that the article refers to CAR's Traditional Housing Affordability Index, includes data going back to 1988. Looking at the index, it is clear that while California homes are less affordable than they were at the most recent bottom in 2012, they remain more affordable then at any other time. According to the index, besides 2012, the closest that homes have ever come to being as affordable as they are now was in early 1994. At that time 43% of Californians could afford the median-priced home.
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