Our CEO, Joe Wallace, gave an inspiring presentation at our recent 2023 Economic Report meeting. One of the salient subjects he discussed was how the average household in the Coachella Valley could not afford to purchase a home here in the current real estate climate. The estimated median household income here is $64,192. So half of all households in the valley make more than $64,192 annually, and half below. That median household income means that you can afford, by most lending standards, a $207,070 home. Try finding such a home in the Coachella Valley! Today we will look a little more closely at this challenging aspect of life in the Coachella Valley.
There are many ways to gauge housing affordability. Whatever the method, much higher mortgage interest rates have made buying a home much less attainable. As of September, the average price for a detached home in the Coachella Valley was around $660,000. What would be an estimated monthly payment for such a home? Assuming a 10% downpayment (and how many average households have $66,000 in savings for a downpayment?), a current interest rate of 8.08%, and including added insurance, taxes, and private mortgage insurance, the payment would be about $5500 per month. Optimally, 30% of your total household income should go to housing. Using that recommendation, you would need a $220,000 household income to afford that average Coachella Valley home.
This map shows what percentage of households in the Coachella Valley have incomes of $200,000 or more. The dark green areas are Census Block groups that have 30-50% of households with such income. So even in the wealthiest areas of our valley, only up to half of the households in those areas could comfortably afford the mortgage for an average-priced home. Only 28 Census block groups out of the 334 in the Coachella Valley have over 30% of households with annual incomes over $200,000-, or 8% of all Census Block groups. If we actually count the number of households in total, the story gets a bit better. 4,362 households in the Coachella Valley have incomes above $200,000, about one-quarter of all households. Still, 75% of all households in the Coachella Valley could not currently afford a loan on the average $660,000 house. And note how many areas there are distributed throughout the valley where only 5% of households can afford such a house.