If any student received a 17 percent on a final exam it would be grounds for a parent-teacher conference. When it comes to the test of California housing affordability for the state’s school teachers, we did our homework and found it’s definitely time to stay after class.
Of all the homes currently for sale in California’s most populous counties where sufficient salary and listings data were available, only 17 percent are affordable on the average California teacher salary of $73,536. This represents a 13 percentage point decline in affordable housing since 2012, when nearly 30 percent of all homes for sale were within reach on the then average salary of $70,487.
Although California’s teachers are making more money than they were four years ago (significantly more in some counties), the percentage of homes affordable to local teachers declined across the board in every county we studied.
“Despite increasing incomes, affordability has eroded in California over the past four years,” said Redfin chief economist Nela Richardson. “A typical home in California costs more than half a million dollars—$200,000 more than the average teacher can afford. Though California is a striking example, it’s not the only state with this issue. Due to the yawning gap between incomes and home prices in communities across the country, our public servants can’t afford to live in the communities they serve. It’s a problem of national importance.”
Counties That Didn’t Make the Grade
If a student must live within a district boundary in order to attend a public school, shouldn’t their teachers be able to afford to live there and be stakeholders in the community too?
Unfortunately, in many California counties this is not the case.
As one might expect, these working-class heroes have it the worst in California’s most expensive, coastal areas. Zero percent of the homes for sale in Silicon Valley (San Mateo and Santa Clara Counties) were found to be affordable. Not far behind was San Francisco, where a scant 0.2 percent (1 out of 571 homes for sale in September) are affordable. In the Bay Area, it takes four full teacher salaries to buy a typical home, a whole salary more than in 2012.
The highest paid teachers in California are in Orange County, where the typical educator makes nearly $80,000 a year. Still, affordability declined by 11 percentage points as home prices in the O.C. have continuously increased over the past four years, leaving just 3.2 percent of homes for sale affordable for teachers. The maximum home price – based on 30 percent of one’s gross income – the average Orange County teacher can afford is $330,000. The median sale price in Orange County as of August 2016: $636,500.
Things are also tough in nearby Los Angeles, where the number of affordable homes for sale declined 17.4 percentage points since 2012. In the Los Angeles Unified School District, the state’s largest district, home prices surged 50 percent in the last four years while teacher salaries rose a mere 4 percent.
“L.A. County is huge and the few homes that are affordable on the average teacher salary are nowhere near where the bulk of L.A.’s schools are located,” said Redfin real estate agent Lindsay Katz. “Some teachers are making it work, however. I recently helped a teacher buy her first home, located five minutes away from the school where she works. The secret to her success? She co-purchased the home with her best friend. She ultimately decided to buy because the rent on her two-bedroom Woodland Hills apartment was about to rise to $2,700 a month.”
Counties Where Teachers Aren’t Left Behind
Although affordability is on the decline, some counties still get a golden apple for having plenty of homes for sale that teachers can afford.
With an average salary of more than $77,000 a year, Fresno’s teachers are some of the highest paid in the state. On that salary, a teacher can afford a $320,000 home, which easily buys three bedrooms and 2,000 square feet on a large lot.
“If you’ve got your California credential and want to be a homeowner too, Fresno is the place to be,” said Marti Cook, a Redfin real estate agent in Fresno. “Fresno is one of the few places left in California where our civil servants are able to become homeowners. It’s a great feeling to help the people who serve our community to realize the dream of homeownership.”
It’s still possible to be a teacher and a homeowner in SoCal too. In Riverside and San Bernardino counties, about 30 percent of the homes for sale are affordable on an average annual salary of about $76,000. With a maximum affordable home price of $300,000, Riverside-based teachers have a wide selection of homes to choose from regardless of the district where they teach.
With that said, the counties with the highest proportion of affordable homes for teachers also saw the most dramatic declines in affordability since 2012.
“This study reconfirms that teacher salaries are not keeping pace with the cost of living in California, and in fact the problem is only getting worse,” said Eric Heins, President of the California Teachers Association. “Costs associated with living in the Golden State make the teaching profession look less attractive to young people considering a career in education. We are facing a massive teacher shortage, and unless the state and local school districts do something to make education a more attractive and financially sustainable career choice, that shortage is going to get worse and negatively impact millions of our students for a long time to come.”
What a Teacher’s Salary Can Buy
Using data from the Bureau of Labor Statistics, we calculated the average salary by county as well as the entire state for elementary, middle and secondary teachers (except special education). Based on these average salaries, we calculated the maximum monthly mortgage payment using a 30 percent of gross income threshold. We also calculated an estimated max home price, assuming a 3.5 percent interest rate.
Next, we gathered all multiple listing service (MLS) listings active on the market in each county as of Sept. 6, 2016, along with the estimated property tax rates. Using the list price, current homeowners association (HOA) dues, and the property tax rate for each listing, we calculated the estimated monthly mortgage cost with a 3.5 percent interest rate and 10 percent down payment of the current list price and determined the percentage of homes where the monthly mortgage payment was equal to or less than the max monthly mortgage payment possible on the average teacher’s salary for each county, as well as the state overall.
We then performed the same analysis for the same date in 2012 to make a four-year comparison in salaries and affordable listings by area. You can download the complete spreadsheet with the results of our analysis here and view an interactive visualization of our results here.
Co-authored with Redfin data scientist Taylor Marr