“Payment Pulse” deals with the budget-busting reality of Southern California homebuying finances — it’s really about the size of the monthly check to the lender, not the magnitude of the headline-grabbing median sales price.
Buzz: Homebuying chilled to the sixth-slowest June since 1988 as the typical Southern California homebuyer faced a record-breaking $3,311 payment — up 44% in a year.
Source: My trusty spreadsheet’s look what’s become a market-icing mix: the intersection of high home prices (monthly median from DQNews) and rising mortgage rates (average 30-year deals from Freddie Mac). This generates an hypothetical typical monthly house home-loan payment a buyer would get, assuming a 20% downpayment. We didn’t account for property taxes, association dues, or insurance.
Rate watch: June’s 5.24% average 30-year rate for the past three months vs. 4.79% in May and 3% a year earlier. So a house hunter’s borrowing power fell 5% in a month and 24% in a year.
Dreaming of living in a place you can call your own gotten so pricey, house hunters are beginning to abandon their searches. Note that in June, 25% fewer home purchases were made in Southern California that a year earlier.
A key culprit is the Federal Reserve, that’s only beginning a battle against the highest inflation rate in four decades with a house hunter’s least-favorite weapon — interest-rate boosts. Just ponder the wannabe owner’s challenge — soaring rates and high prices.
In one month, the region’s estimated payment rose $123 — that’s 3.9% extra. In a year, payments rose $1,021 or 45% more sent to the lender each month. Please note that the median price, by itself, is up 10% over 12 months.
And do not forget that this financing math assumes a house hunter with $150,000 downpayment — that’s 20%. And that financial burden expanded by $14,200 in the past year.
Consider the financially painful math within the counties, all hitting record highs for a month’s estimated house payments …
Los Angeles: $3,796 payment on the $860,000 median. In the month, $189 or 5.3% higher. Year’s rise? $1,132 or 42%. Median? up 9% over 12 months. And 20% down is $172,000 — up $14,000. June sales were down 23% in a year.
Orange: $4,525 payment on the $1,025,000 median. In the month, $104 or 2.4% higher. Year’s rise? $1,489 or 49%. Median? up 14% over 12 months. And 20% down is $205,000 — up $25,000. Sales fell 34% in a year.
Riverside: $2,624 payment on the $594,500 median. In the month, $114 or 4.5% higher. Year’s rise? $904 or 53%. Median? up 17% over 12 months. And 20% down is $118,900 — up $16,900. Sales fell 21% in a year.
San Bernardino: $2,286 payment on the $517,750 median. In the month, $92 or 4.2% higher. Year’s rise? $791 or 53%. Median? up 17% over 12 months. And 20% down is $103,550 — up $14,950. Sales fell 20% in a year.
San Diego: $3,642 payment on the $825,000 median. In the month, $77 or 2.2% higher. Year’s rise? $1,116 or 44%. Median? up 10% over 12 months. And 20% down is $165,000 — up $15,200. Sales fell 32% in a year.
Ventura: $3,576 payment on the $810,000 median. In the month, $252 or 7.6% higher. Year’s rise? $1,095 or 44%. Median? up 10% over 12 months. And 20% down is $162,000 — up $14,900. Sales fell 21% in a year.
No matter how you slice pricing, homebuying costs look huge — even if you factor in the surging cost of living.
June was the No. 23 priciest month for buyers in the six-county region dating to 1988, adjusting payments for inflation. That’s higher than 94% of all months.
By county, the inflation-adjusted impact: Los Angeles (June was the ninth-priciest since 1988, or bigger than 98% of all months), Orange (No. 10 or 98%), Riverside (No. 33 or 92%), San Bernardino (No. 28 or 93%), San Diego (No. 9 or 98%), and Ventura (No. 59 or 86%).
Jonathan Lansner is business columnist for the Southern California News Group. He can be reached at email@example.com.