Tapped out at the highest levels, buying a home is still out of reach for many Americans, despite softening home prices. The National Association of Realtors housing affordability index maintained a high of 161.8 in July. A level of 100 indicates that a family earning a median national income has enough to pay for a median priced home.
As the foreclosure crisis takes more than 100,000 homes nationally on average a month, the number of households who actually own or have a mortgage on their homes is also sliding. That would usually translate to an increase in renters, but the number of renters isn’t increasing at what would regularly be considered any sort of normal rate either under the circumstances as more former homeowners move in with friends and relatives.
Despite the softening economy, lower home prices and record low mortgage rates the number of people able to afford a home in many areas of the country remains abnormally low.
San Luis Obispo, California illustrates the plight of many, who see homeownership as being out of reach. The percentage of households in the county that could afford to purchase any home was 48% in July, according to the California Association of Realtors. The median price of a home in San Luis Obispo, located on California’s scenic Central Coast is about $337,000. The minimum income grossed on an annual basis to qualify for a home at that price would be $55,670.
Surrounded by its majestic Pacific Coastal mountain range just a ten minute drive from the ocean, San Luis Obispo is halfway between San Francisco and Los Angeles, boasting an average annual temperature of 70.2 degrees. It’s a massively attractive modern community, but doesn’t provide a core of major employers for residents that pay well.
Income from jobs is the largest obstacle for many in San Luis Obispo to buy a home. Despite the real estate boom nationally, San Luis Obispo has maintained a “no growth” policy with a population of just 46,712. Large employers haven’t moved into the area, leaving locals to find work at lower paying service jobs paying $10 to $12 an hour.
San Luis Obispo isn’t alone with its problem as the nation’s unemployment rate rises with losses in manufacturing and higher paying technical jobs to workers outside the U.S. in a growing global economy. Out-sourcing has accounted for a large part of the problem nationally, but on a local level some of the more attractive communities like San Luis Obispo, home to Cal Poly San Luis Obispo, and other cities the issue nags like a cancer hurting the long term health of the community’s local economy and housing market.
Instead of trying to attract large employers to San Luis Obispo, the city is actually working to keep employers that currently make their home in the community. “There isn’t a specific program to bring large employers into the area,” said Ermina Karim of the city’s Chamber of Commerce. “But there is a formal program that is underway to retain businesses.”
Battling through the troubled economy is about all many regions of the country are hoping for at the best.