How Affordable is Housing in Ukiah?

Anyone in the market to buy a house right now knows how competitive the market is. People are offering tens of thousands of dollars over the asking price and still getting outbid. The California Association of Realtors recently reported that the median price for single-family homes in the state is $720,500 and rising. The median is the mid-point (as opposed to the average), and for the sake of clarity, the median home price only considers homes that have sold, not all homes in an area.

California is a big state with wildly differing regional housing markets. Counties like Lassen have a median home price of $249,000 while counties like San Mateo have a median price of $1,850,000. Here in Mendocino County, as of mid-June, the median price of a single-family home was about $500,000. In the real estate business, we use the Housing Affordability Index to determine how many families can afford to buy a mid-priced home in their area.

The California affordability index is 27, which means about 27 percent of typical families can afford to buy a median-priced, single-family home. By comparison, in Lassen County 62 percent of typical families can afford a median-priced, single-family home, and in San Mateo County it is only 19 percent.

Interestingly, here in Mendocino County, we match the state average: that is, 27 percent of typical families can afford to buy a median-priced, single-family home, which is down from the same period a year ago when 36 percent of local families could afford such a home. The reason I find this particularly interesting is because Mendocino County construction costs are comparable with construction costs in Lassen County, which speaks to other influences in our regional housing market (some of which I discussed in my last column).

So where are these median-priced homes and what do they look like? In Ukiah, they are typically three-bedroom, two-bath homes. If they are located on the West Side, they’ll be about 1500 square feet. If they are located in Alexander Estates, the subdivision near Ukiah High School, they’ll be closer to 1800 square feet. You might also find a median-priced, single-family home in other areas where homes are typically more expensive, such as Deerwood or El Dorado Estates, but if you do, that house will likely be in poor condition or in need of significant updating.

Sometimes, the Housing Affordability Index underestimates the number of people who can afford median-priced homes. The calculation assumes homebuyers have saved enough for a 20-percent down payment, but it does not include all the homebuyers with parents who love them a whole lot and are willing to supply that down payment, or the folks who only report some of their income.

Sometimes, the Housing Affordability Index overestimates the number of people who can afford a median-priced home because the index uses a flat rate for homeowners insurance. In the Ukiah Valley, homeowners insurance that includes protection against wildfires is expensive, as are policies that include flood insurance for homes in low-lying areas.

When all is said and done, the important thing to note is that we live in a region where housing prices continue to climb. If you can afford it, now is a good time to buy. If you lock in these extraordinarily low interest rates and you have no plans to sell in the near future, now is a great time to buy. If you anticipate only keeping the house for a few years, I would be cautious. Interest rates are likely to rise significantly in the near future, which will dampen the housing market. The fact is, people purchase homes based on the monthly payment, not the purchase price. As interest rates go up, people’s buying power will go down and the law of supply and demand says prices, will therefore, go down. If you have questions about property management or real estate, please contact me at or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery. Dick Selzer is a real estate broker who has been in the business for more than 45 years.

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