“Payment Pain” deals with the harsh reality of Southern California homebuying finances — it’s really about the size of the monthly check to the lender, not the sales price.

Buzz: A Californian is 35% less likely to qualify to buy a starter home than a typical U.S. first-time house hunter.

Source: My trusty spreadsheet looked at the California Association of Realtor’s first-time buyer “affordability” benchmarks — state vs. national — to study the financial push for home seekers to look outside of the state.

Pay to the order of

At year’s end in California, a $96,000 income was needed to afford the $3,200 payment on a median-priced $677,850 starter house. That translates to a 44% affordability rate for Californians as 2022 started vs. 52% in the pre-pandemic months of 2020’s first quarter.

Nationally, a buyer needed a $43,500 income to afford the $1,450 payment on a median $307,450 starter house. Affordability was 67% vs. 73% in 2020’s first quarter.

Now ponder the growing gap between these measures of homebuying finance-ability. A Californian was 35% less likely to have the income needed to buy vs. a typical U.S. buyer at year’s end. In 2020’s first quarter, before business limitations rocked the economy and the housing market, the gap was just 29%.

Locally speaking

Let’s look at similar math for fourth-quarter home payments found in the four counties covered by the Southern California News Group …

Los Angeles: $96,000 income needed to afford a $3,200 payment on a median $678,210 starter house. That’s 39% affordability, off from 47% in pre-pandemic days.

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Orange: $138,300 income needed to afford the $4,610 payment on a median $977,500 starter house. That’s 34% affordability down from 41% pre-pandemic.

Riverside: $70,500 income needed to afford the $2,350 payment on a median $497,250 starter house. That’s 51% affordability down from 60% pre-pandemic.

San Bernardino: $54,300 income needed to afford the $1,810 payment on a median $382,500 starter house. That’s 61% affordability down 69% pre-pandemic.

Caveat

No two house hunters are alike. This less-than-traditional metric estimates a typical first-timer’s challenges by being more generous in qualification terms than most affordability benchmarks. For example, it assumes a house hunter earns the median household income and is buying a residence worth 85% of the median sales price, financed with 10% down. Payments, insurance and taxes all eat up 40% of household income.

Bottom line

Let’s look at affordability changes — state vs. nation — as a yardstick of how much push exists is for rookie house hunters to seek ownership outside the Golden State.

Year end’s 35% affordability gap is a larger nudge to leave California for cheaper housing than what existed in 2013-2019 (an average 31% gap) as housing recovered from the Great Recession’s wrath.

Yet it’s also not the 40% gap of the “bubblish” era of 2000-2007.

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