LA Supplants San Fran as Most Expensive Housing Market in U.S.
Washington, DC, February 18, 2020-San Francisco, which has been the nation’s least affordable major housing market for the past two years, was supplanted by Los Angeles in Q4 2019, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI).
In all, 63.2% of new and existing homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $75,500. This is virtually unchanged from the 63.6% of homes sold that were affordable to median-income earners in the third quarter.
“While builder confidence remains strong, they continue to deal with shortages of lots and labor, inefficient zoning requirements, and density and growth restrictions in many markets that are driving up housing costs and hurting affordability,” said NAHB chairman Dean Mon, a homebuilder and developer from Shrewsbury, New Jersey.
“Growing household formations, ongoing job creation and rising wage growth are fueling housing demand,” said NAHB chief economist Robert Dietz. “But a record-low resale inventory, coupled with underbuilding as builders deal with supply-side constraints, continue to put upward pressure on home prices even as interest rates remain at low levels.”
Mortgage rates and home prices remained relatively stable over the past two quarters, which is why affordability held steady. The national median home price was $279,000 in the fourth quarter, essentially unchanged from $280,000 in the third quarter of 2019. Likewise, average 30-year mortgage rates stood at 3.78% in Q4 compared to 3.73% in Q3.