MORTGAGE RATES SURGED IN 2022 AND HAVE REMAINED ELEVATED, SQUEEZING HOME AFFORDABILITY AND KEEPING DEMAND SLUGGISH EVER SINCE.
LOW DEMAND AND AFFORDABILITY
TODAY’S MONTHLY PAYMENT IS 71% OF THE ORANGE COUNTY MEDIAN HOUSEHOLD’S MONTHLY INCOME.
Everyone needs a break from cooking, and going out is the answer. But it is far more expensive than it used to be. A meal that cost $10 in 2000 has more than doubled since then, rising to $24 today. A Disneyland ticket in 2000 cost $41, compared to $169 during the summer and $224 on weekends in late June and July 2026. A grande vanilla latte at Starbucks has climbed from $3.05 in 2000 to $5.45 today, a 79% increase. How about the monthly cost of streaming on Netflix? It has ballooned by 150% from $7.99 in 2011 to $19.99 today, rising by $2 since last year alone. Inflation has made everything more expensive, but some costs have risen far beyond the overall rate of inflation.
Similarly, housing costs have risen sharply, straining home affordability and impacting buyer demand. In looking at home affordability, it is not just prices. It is essential to consider mortgage rates, home prices, and incomes. Mortgage rates have been much higher than where they are today, but that does not mean it was more unaffordable. In 1980, the average mortgage rate was 13.75%, the median income was $22,000, and the median detached sales price was $108,000. That meant the monthly housing payment was 55% of the median household income. Rates continued to drop, and incomes climbed decade after decade. In 2000, mortgage rates were at 8%; the median income had more than doubled since 1980, rising to $56,000; and the median detached sale price climbed to$317,000. Yet, the monthly payment was only 40% of the median income.
Joy Lee
949.290.4903
joy@heyjoylee.com
DRE# 02102122