Can A Family Earning the Median Income Buy a Home in San Diego?
The short answer=PROBABLY NOT
At least not if the home they are purchasing is priced at the current Median Price. Why?
|
2014 median Income for San Diego County |
Median Price for a single family home in San Diego County as of April 2014 |
|
| $75,900 for a family of four | $491,000 | |
| (As published by SDAR on 5/5/2014) |
| Assumptions: | |
|
Credit Score (To determine Mortgage Insurance cost) |
740 |
|
Rate (for illustration purposes-not a rate quote) |
4.375% |
| Down Payment | 10% |
| Monthly Debt | $500 |
First, let’s start off with the down payment. Loans exceeding the conforming limit of $417,000 require 10% down. I think that not many families earning $75,900/ year will have $50,000 available for down payment.
But let’s assume they do.
What kind of payment would they be looking at?
| P&I | $2,206.34 |
| MI (est) | $254.09 |
| Ins (est) | $85.93 |
| Tax (est) | $511.46 |
| HOA | $0.00 |
| Total Payment | $3,057.82 |
This family would be trying to qualify with ratios of 48.3%/56.3%
Current QM guidelines call for total debt ratio of 43%
So how much income would be needed to qualify for this scenario if 43% is the target? $99,600
Of course, 43% is just a guideline which can be exceeded should the applicant meet certain requirements. Regardless, you can see that there is a large gap between the ideal income needed to qualify for a home in San Diego sold at the current median price and the median income in San Diego County.
| Assumptions: | |
|
Credit Score (To determine Mortgage Insurance cost) |
740 |
|
Rate (for illustration purposes-not a rate quote) |
4.375% |
| Down Payment | 5% |
| Monthly Debt | $500 |
What sales price should this family be searching for assuming the 43% total debt limit?
Approximately $350,000 with 5% down payment
| P&I | 1,660.12 |
| MI | 171.79 |
| Ins | $61.25 |
| Tax | 364.58 |
| HOA | $0.00 |
| Total Payment | $2,257.75 |
Is This
A
Realistic
Figure?
YES!
There are several areas in San Diego County with Median Prices below the County figure.
| Zip Code | City/Area | Zip Code | City | Zip Code | City/Area | ||
| 91906 | Campo | 91945 | Lemon Grove | 92004 | Borrego Springs | ||
| 91950 | National City | 91962 | Pine Valley | 92036 | Julian | ||
| 92102 | San Diego | 92105 | East San Diego | 92113 | Logan Heights | ||
| 92114 | Encanto | 92139 | Paradise Hills | 92173 | San Ysidro |
So despite the fact that The National Association Of Realtors reports the Affordability Index in San Diego as -20.9%, purchasing a home in San Diego is still possible even if you are not part of the higher paid population.
So if you are ready to stop renting and become a homeowner, now is the time do jump into the market.
Contact me for a referral to a local Realtor who is an expert in the neighborhood you want to call home.