Rage Against The Housing Market Machine

$100,000 a year. That used to be the goal. That used to be a lot of money. 

Now, in many parts of the country, it’s chump change, especially if you want to become a homeowner. 

$2,538. We teased that number in Monday’s Juice. According to the latest data from real estate research firm Redfin, that’s the typical monthly payment on a house in America today. Another all-time high. Redfin came up with that number using a 6.39% interest rate for a 30-year mortgage. 

Amazing, given that the median sale price nationally dropped 2.6% from a year ago to $366,200. On the front end of that equation, Redfin says the median asking price of “newly listed homes” was $393,021, as of mid-April. That’s up 0.4% year-over-year. 

Location Matters More Than Ever

Dig this from the Redfin report:

Los Angeles Redfin agent Costanza Genoese Zerbi said that while few homeowners are moving, locked in by low rates, first-time buyers are on the hunt. There’s enough demand and such limited supply that all her recent listings received multiple offers. 

Zerbi cited an example in Long Beach (which is, with traffic, easily an hour from Los Angeles) where she received 17 offers on a condo listed at $1.3 million, which ended up selling for $1.5 million. 

Rage Against The Machine

That’s nothing. Move away from The LBC to a more sought-after part of Los Angeles county and the stakes get even higher. 

Consider the Silverlake neighborhood, a hip enclave a stone’s throw from Downtown LA. 

Rage Against The Machine frontman Zack de La Rocha recently dropped $3.7 million on a 3-bedroom, 2.5-bath, 2,000 square feet bungalow (yes, we said 2,000 square feet, then we said bungalow). Crazy part is that de La Rocha won a bidding war that saw him pay $700,000 over asking.

And there’s plenty of people running around Los Angeles (and other expensive markets) with money buying homes without recognizable names. 

The Bottom Line: Here again, it comes down to location. 

If you’re looking to buy in LA, where the median home price is roughly $980,000, as of March 2023, you’re looking at a monthly payment in the neighborhood of $5,500. Significantly more than Redfin’s national figure of $2,538. Head to Cleveland, where the median is approximately $125,000 and your monthly outlay comes out to a more manageable $703 a month. 

We assume a 10% down payment when calculating these monthly payments. 

So, affordable housing does exist in America. You just can’t get in places like LA.

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