Seven of the nation’s ten least affordable housing markets for teachers are found in California, according to Trulia.
In California’s largest metros, the average teacher’s salary will qualify them to buy in:
- Bakersfield, 77% of homes;
- Fresno, 72% of homes;
- Sacramento, 33% of homes;
- Los Angeles, 17% of homes;
- San Diego, 14% of homes;
- Ventura, 9% of homes;
- Oakland, 8% of homes;
- Orange County, 7% of homes;
- San Jose, 2% of homes; and
- San Francisco, less than 1% of homes.
This analysis is based on a mortgage payment equal to 31% of the average teacher’s salary for each area, and a 20% down payment.
Just 0.4% of listed homes are available to the average teacher with a salary of $72,000 in San Francisco. Trulia suggests teachers look east to Antioch, Oakland, Hayward or Union City, where a teacher salary can qualify to buy 8.2% of homes.
Households led by two working adults fare better. In the above example, two San Francisco teachers will be able to qualify for nearly 15% of all homes listed in the city. However, Trulia’s analysis doesn’t account for things like the cost of childcare when both adults with children work, which reduces homebuyer purchasing power.
On the other end of the spectrum, Bakersfield and Fresno are great places for teachers who want to become homeowners. Even Sacramento, where one-third of homes are within reach of a single teacher’s salary, doesn’t look too bad when comparing to California’s coastal markets.
Statewide, just 17% of homes are within reach of the average teacher’s salary, according to the United Educators Association for Affordable Housing. All of these percentages are much lower when considering many teachers do not have a full 20% down payment.
Homebuying programs for California teachers
Fortunately for teachers, theirs is a highly valued occupation in the community, despite the low pay. As such, several homebuying programs exist to help teachers become homeowners.
Some school districts have programs to assist teachers buy a home. Homeownership puts roots in a community, something school districts like in a teacher. Closely related, school districts with the most expensive home prices also tend to have the highest teacher turnover.
The Department of Housing and Urban Development (HUD) runs the Good Neighbor Next Door program, which provides a 50% discount on HUD homes to certain public employees who qualify, including K-12 teachers. The downside: very few HUD homes are available. At the time of publication, just 29 HUD homes were listed in the entire state.
Teacher Next Door matches teachers and other public service members with local real estate agents who are familiar with teacher homebuying programs. The program also provides a closing cost rebate.
California Housing Finance Agency (CalHFA) runs the Extra Credit Teacher Home Purchase Program. This program allows teachers who are also first-time homebuyers the option of financing some of the down payment or closing costs.
These programs are all poor substitutes for accessible homebuying options in California’s coastal cities. What about other homebuyers operating at a median or below-median income? And is financing your down payment or closing costs really such a good idea? (Read: It’s not).
A better solution is simply to provide more homebuying options for this class of homebuyer. More low-tier homes are essential to stabilize out-of-control home prices.
California’s homeownership rate is the third-lowest in the country, after New York and Nevada, and high home values are the number one reason. The state and local legislators can step in and encourage more construction of low-tier housing through building incentives and by loosening local zoning in appropriate areas.