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California Holds 5 of Nations Ten Costliest Markets

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Posted by RE-Insider on 8/27/14 • Categorized as Industry News

We all know that home-prices have remained flat throughout the year, but the run-ups of 2013 have left the bar at its highest point in years, creating issues of affordability nationwide. This problem is only intensified in California though, as prices remain exceedingly high for a handful of markets throughout the Golden State, putting home ownership out of reach for a growing number of would-be buyers on the west coast.
rise in price
According to a new report from the National Association of Realtors, which measured the median price of homes sold in the second quarter, five of California’s largest markets are among the top 10 most expensive housing markets in the country.

San Jose, where the median existing single-family price was $899,500, took the first spot in this category, followed closely by San Francisco, Orange County, San Diego and Los Angeles, where median prices reached $769,600, $691,900, $504,200 and $420,300 respectively.

Even the relatively inexpensive Inland Empire sat 21st on the list— pricier than Miami; Austin, Texas; or Chicago — with a median of $274,600.

Prices rose more slowly compared with last year in most U.S. housing markets, the report said. But prices are now well above levels of the last few years. That has put home buying out of reach for growing numbers of households, especially in high-cost markets. Silver Lake

Qualifying for a mortgage on a median-priced home in Orange County with a 20% down payment would require household income of $131,168, the report estimates; with 5% down, it would require $155,762.
In metro Los Angeles, a median-priced home would require $79,679 in household income to qualify at 20% down, and $94,619 at 5% down.

While this may seem reasonable to some, these statistics should raise concern considering the median household income in Orange County is $75,566, according to the Census Bureau. In Los Angeles County it is $56,241.

Federal Reserve May Raise Interest Rates

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Federal Reserve officials raised the possibility they might raise rates sooner than anticipated, as they neared agreement on an exit strategy, according to minutes of their July meeting.

“Many participants noted that if convergence toward the committee’s objectives occurred more quickly than expected, it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipated,” the minutes, released today in Washington, read.

Fed Chair Janet Yellen has committed to use monetary policy to strengthen the labor market so long as inflation remains in check. “Many participants” at the meeting still also saw “a larger gap between current labor market conditions and those consistent with their assessments of normal levels of labor utilization,” the minutes showed.