The average home price in California is $900,000 – which means the California dream is officially over

The California Association of Realtors (CAR) recently announced that the median home price in the state had surpassed $900,000 for the first time. Potential home buyers in California will likely greet this news as happily as ants at a picnic. But the larger implication of CAR’s announcement is that it marks the end of the original California dream.

California home prices have reached stratospheric heights for decades, but the current price is staggering even by those standards. California’s median home price of $904,000 is 5% higher than it was a month ago and 11% higher than it was in April 2023. That’s a significant increase by any measure, and certainly a contributing factor to the state’s homelessness crisis.

However, low interest rates have allowed even very qualified borrowers to do business in California over the past 15 years. Sadly, today no one under 40 can remember California’s original promise. Baby boomers and much of Generation X from across the country have been able to move to the Golden State and live idyllic lives.

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For some people, that dream was Hollywood; for many others, it was good schools and affordable housing in the metropolitan areas of big cities like San Francisco and Los Angeles. It used to be that simple. Sure, California has always had its share of insanely expensive enclaves like Beverly Hills, Malibu, Pacific Heights, and LaJolla. But that’s where the million-dollar homes used to be, and living there was something people aspired to.

However, California had promised that people who couldn’t afford a $900,000 home could still buy a home in the San Fernando Valley or East Bay. Teachers, firefighters, police officers and laborers could use FHA financing to buy a $200,000 home with only a $6,000 down payment. Today, the idea of ​​buying a $200,000 home anywhere in California seems like something out of a fairy tale.

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$200,000 is more like a down payment on the average home in California. According to an analysis by GoBanking Rates, California is the second most expensive state in the country to live the “American Dream.” An average couple in California would need to earn $245,000 a year to afford a home and raise two children comfortably. Only Hawaii, where almost all consumer goods are imported from outside the island, costs more.

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According to the September 2023 U.S. Census report, the median income in America was $74,580, covering only about a third of the cost of a home in California. Keep in mind that it takes $245,000 to live a normal life and buy a normal home in California, not a mansion in Pacific Palisades or a 100-acre ranch in Ojai with a main house surrounded by orange groves.

By all appearances, the median home price in California is only going to rise. Even if the market suffered a 30% correction, most buyers would no longer be able to afford a home given today’s interest rates. California remains a paradise, even if it seems to have become out of reach for all but the wealthiest Americans. This is a stark contrast to the Golden State’s past, and it seems as though the bygone era is lost forever.

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This article, “California’s median home price of $900,000 means the California dream is officially over” originally appeared on Benzinga.com

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