“Survey Says: The Income Gap for First-Time Homebuyers in Southern California”

The latest survey on housing affordability in Southern California has revealed some staggering statistics that shed light on the challenges faced by first-time homebuyers in the region. According to the California Association of Realtors’ first-time buyer “affordability” index for the spring quarter, the typical first-time homebuyer in Southern California needs to make an extra $54,000 or 94% more than other Americans seeking a starter home. This means that only one-in-three local households meet the qualification standard for purchasing a starter home in the region.

The index estimates that a first-time buyer in Southern California needs at least $111,600 in annual income to qualify for the $3,720 monthly payment required for a $680,000 residence. This is a significant increase from the previous year, where 43% of households could qualify, compared to just 36% in spring 2022. The rising home prices, coupled with an 8.5% annual appreciation rate and an increase in adjustable-loan rates to 4.3%, have made it even more challenging for first-time buyers to enter the market.

The affordability challenge is not unique to Southern California, as similar trends are seen across the state. Statewide, a first-time homebuyer needs $123,300 in income to qualify for a $4,110 monthly payment for a $750,860 residence, with affordability dropping from 40% to 34% in the past year.

The survey also breaks down the affordability challenges by county, with Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura all showing varying levels of income required to qualify for a starter home. Despite the high costs, first-time buyers in Southern California can take solace in the fact that they are not in the Bay Area, where the income required for a starter home is even higher.

Overall, the survey highlights the significant income gap that first-time homebuyers in Southern California face compared to the rest of the country. Whether it’s the price of paradise or the result of housing policies, the challenges are clear. As first-timers navigate the competitive market, they must also contend with investors vying for income-producing properties.

In the end, the survey serves as a reminder of the financial hurdles that first-time homebuyers in Southern California must overcome to achieve their dream of homeownership.