Enterprise

Southern California home payments skyrocket 40% in one year – Press Enterprise

“Payment Pulse” deals with the financial reality of buying a home in Southern California – it’s really about the monthly check to the lender, not the median selling price that grabs the headlines.

Buzz: A record 40% increase in real estate payments in Southern California helped slow home buying to the lowest number of sales in May since 2011 – minus 2020 iced by the pandemic.

Source: My trusty spreadsheet examined the frustrating currency mix of rising house prices (using DQNews’ monthly median) and rising mortgage rates (average of Freddie Mac’s 30-year fixed-rate deals). We’re tracking a hypothetical monthly home loan payment for a buyer paying the median price – assuming a 20% down payment, with no property taxes, association dues, or insurance.

Rate the watch: The three-month 30-year average loan for the month of May was 4.79% compared to 4.3% the previous month and 3.03% a year earlier. This pop rate crushed a borrower’s purchasing power. In one month it fell by 5.6% and in one year it fell by 19%. This is the second largest 12-month decline since 1988.

Pain

Estimated mortgage payments in May for the region hit a record high of $3,188 off the record median of $760,000.

Within a month, the payout jumped $178, or 5.9% more. In one year, payments increased by $918 or 40%. (Please note that the median price alone is up 13% year over year.)

And remember that this calculation assumes a down payment of $152,000, or 20%, a financial burden that has increased by $18,000 in one year.

Locally speaking

The spreadsheet also found painful calculations in each of the counties, with all of May’s estimated home payments hitting record highs…

Los Angeles: It takes a payment of $3,607 to get the median house of $860,000. During the month, this payment increased by $181, or 5.3% more. In one year, it increased by $982 or 37%, with the median increasing by 11% over 12 months. And that 20% down payment is $172,000, up $17,000 in one year.

Orange: Payout of $4,423 on a record median of $1.055 million. In the month, it’s up $264 or 6.4% more, and in one year, it’s up $1,391 or 46%. The median price is up 18% year-over-year. And this 20% drop represents $210,900, an increase of $31,900 in one year.

Riverside: Payment of $2,510 on the median maximum of $598,500. During the month, up $173 or 7.4% more. Increase of the year? $810 or 48%. Median? up 19% over 12 months. And 20% less is $119,700, or $19,300 more in one year.

Saint Bernardine: Payout of $2,181 on the median maximum of $520,000. During the month, up $123 or 6% more. Increase of the year? $718 or 49%. Median? up 20% over 12 months. And 20% less is $104,000, or $17,600 more in one year.

San Diego: Payment of $3,565 on the median maximum of $850,000. During the month, up $238 or 7.2% more. Increase of the year? $1,109 or 45%. Median? up 17% over 12 months. And 20% less is $170,000, or $25,000 more in one year.

Ventura: Payout of $3,331 out of the median of $794,250. During the month, up $111 or 3.5% more. Increase of the year? $960 or 40%. Median? up 13% over 12 months. And 20% less is $158,850, or $18,850 more in a year.

At the end of the line

Think about these skyrocketing costs in historical context and the extreme pressure they put on house hunters.

Regionally, the estimated jump in home payments for the year – 40% – is the largest since 1988. May’s jump was also No. 1 in Orange, Riverside, San Diego and Ventura counties. The San Bernardino jump was No. 2 and the Los Angeles jump was No. 5.

These kinds of cost increases make Southern California’s 16% drop in sales over the past year unsurprising. It was the 58th biggest 12-month decline since 1988 (or worse only 14% of the time).

The decline in purchases over 12 months, by county: Los Angeles (excluding 16%), Orange (excluding 24%), Riverside (excluding 12%), San Bernardino (excluding 9%), San Diego (excluding 18%) and Ventura (excluding 19%).

Plus, the 5% drop in purchases from April was a rarity — since 1988, sales have only fallen in that 30-day period 18% of the time. A typical May sees a 5.4% increase in sales compared to April.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be contacted at [email protected]