Housing affordability at forefront of CA REALTOR® concerns
Source: San Jose Mercury News
California's housing affordability is at the forefront of REALTOR® concerns, and CALIFORNIA
ASSOCIATION OF REALTORS® CEO Joel Singer recently commented at an event in Sacramento that
for many Californians, housing affordability has become a personal issue. According to the trade
association, home buyers needed to earn a minimum annual income of $87,700 to qualify for the purchase
of a $442,430 statewide median-priced, existing single-family home in the first quarter of 2015.
Making sense of the story

California's housing affordability problem is rooted in an inadequate housing supply, according to
Singer. New construction's recovery has been slow and missing 165,000 new units per year.

Singer stated, “Homeownership is in jeopardy. Our challenge as REALTORS® and citizens of
the state is how to re-establish housing affordability and homeownership when government policy
has failed. There's no reason why the California median price of a home should be twice that of
the national median.”

Factors inhibiting development of new housing units are fiscal interests of local government;
local residents' disdain for future development, especially multifamily units; and an unfavorable
legal/business environment created for developers in general and multifamily units in particular.

The median home price was $418,570 in first-quarter 2014, and an annual income of $86,800 was
needed to purchase a home at that price.

California's housing affordability level was close to the national level from 2006 to 2008, but has
sharply declined since it peaked at 56 percent in the first quarter of 2012. It continues to
deteriorate today, where it hovers at around 30 percent, despite favorable interest rates.

Slow income growth has forced people to spend up to two-thirds of their income on housing,
mostly of which is on rental housing.

Singer explained California's workforce as a whole cannot afford to buy a median-priced home
because most house and rent payments are above historic shares of income. "Affordable rents
position people to buy affordable homes, and in California, we have neither," said Singer.
Read the full story
http://www.mercurynews.com/saratoga/ci_28111125/los-gatos-saratoga-housing-affordability-atforefront-realtor
In other news …
More Millennials Renting, But Just As Many Want To Own
Source: Wall St. Journal
The findings of an Urban Land Institute-commissioned survey of Americans of age 19 to 36 reveal that
more millennials are renting now than were five years ago, but most of them still aspire to live in singlefamily, detached homes in the near future. Problematically, homeownership among Americans 35 and
younger registered 34.6 percent in the first quarter, down markedly from the peak of 43.6 percent in the
second quarter of 2004. The relative dearth of home purchases by first-time and entry-level buyers has
kept the home-construction rebound subdued.
Read the full story
http://blogs.wsj.com/economics/2015/05/13/survey-more-millennials-renting-but-just-as-many-want-toown/
Signs Indicate More Wage Growth is Coming, But It Can Still Be Tough
to Accurately Predict
Source: DSNews.com
The importance of wage growth to the economy can’t be overstated, as household income drives
consumer spending, which in turn drives the bulk of economic activity. But while the unemployment rate
has fallen steadily in the last five years, wage growth has remained steady during that period. But many
businesses say they intend to raise wages, which is an indication that greater wage growth is on the
horizon. That being said, factors such as slack in the labor market, bargaining power, worker productivity,
inflation, and many other variables and factors, make wage growth impossible to accurately forecast.
Read the full story
http://dsnews.com/news/05-11-2015/signs-indicate-more-wage-growth-is-coming-but-it-can-still-betough-to-accurately-predict
Housing Starts Projected To Hit 1.1 Million in 2015
Source: Builder Magazine
U.S. housing starts are expected to advance gradually to hit 1.1 million this year, with 715,000 of those
being single-family homes as defined by the Commerce Department, according to Metrostudy’s first
quarter 2015 Home Building Outlook. Multifamily housing starts are expected to increase to 385,000 as
the rental market continues to exhibit strength. The southern U.S. dominates in terms of sales volume,
with the largest new home markets expected to be Houston, Dallas, and Atlanta.
Read the full story
http://www.builderonline.com/building/housing-starts-projected-to-hit-11-million-in-2015_o
Tight mortgage market keeps lid on Americans’ debt levels
Source: Yahoo! Finance
Household debt—including mortgages, credit cards, auto loans and student loans—inched up 0.2 percent
between January and March to $11.85 trillion, according to new figures from the Federal Reserve Bank of
New York. Overall, U.S. borrowers are playing it safe this year, with overall debt levels largely flat in the
first quarter amid tight mortgage lending and hints that some consumers are using gas savings to pay
down bills. The very slight increase in household debt was the smallest increase since the second quarter
of last year, when debt levels declined outright.
Read the full story
http://finance.yahoo.com/news/tight-mortgage-market-keeps-lid-195400987.html
Millennials’ Credit Access Not Hindered by Student Loan Debt, Study
Shows
Source: HousingWire
Younger consumers have not allowed loan obligations to hinder repayment of other credit-related items
such as auto loans and mortgages when compared with peers with no student loans, according to a study
by TransUnion. Despite increases in student loan balances for the past decade, the findings of the study
contradict the belief that student debt is preventing young adults from accessing credit. The study noted
that, compared to students without loans, consumers ages 18 to 29 that are repaying their student loans are
usually able to get new loans. These students perform as well or better on those new loans.
Read the full story
http://dsnews.com/news/05-13-2015/millennials-credit-access-not-hindered-by-student-loan-debt-studyshows
NAR: Tight inventory, demand push home prices higher in first quarter
Source: HousingWire
The median existing single-family home price jumped in 85 percent of measured markets, with 148 out of
174 metropolitan statistical areas showing gains based on closings in the first quarter compared with the
first quarter of 2014, reports the National Association of REALTORS®. Prices were pushed higher in
many metros areas in the first quarter of 2015 due to stronger demand and tight inventory levels. Fiftyone metro areas in the first quarter (28 percent) experienced double-digit increases, a sharp increase from
the 24 metro areas in the fourth quarter of 2014.
Read the full story
http://www.housingwire.com/articles/33850-nar-tight-inventory-demand-push-home-prices-higher-infirst-quarter
Talking Points …

Lower interest rates and stabilizing home prices over the past year combined to make it easier for
more Californians to purchase a home in the first quarter of 2015, according to the CALIFORNIA
ASSOCIATION OF REALTORS®.

The percentage of home buyers who could afford to purchase a median-priced, existing singlefamily home in California in first-quarter 2015 rose to 34 percent from the 31 percent recorded in
the fourth quarter of 2014 and up from 33 percent in the first quarter a year ago.

Home buyers needed to earn a minimum annual income of $87,700 to qualify for the purchase of
a $442,430 statewide median-priced, existing single-family home in the first quarter of 2015.