For a lot of families that are well-positioned to start serious house-hunting this summer, one question may give them pause: are Costa Mesa home prices just too high to be reasonable? The answer seems largely speculative, but there are objective benchmarks that point to an answer.

Back in the spring of 2018, author Aaron Terrazas compiled a thoroughgoing analysis of what seemed to be a serious threat to U.S. residential real estate’s immediate future. Impending mortgage rate hikes looked likely to “threaten housing affordability and inventory.”

As Terrazas wrote, then-current mortgage interest rates were “very low by historical standards.” His analysis described this rare circumstance which had kept monthly payments relatively affordable “even as 2018 home prices reach new peaks.” His appraisal was backed up by hard facts, made possible because ‘affordability’ is not some nebulous term. The National Association of Realtors® measures it at regular intervals as a calculation of typical mortgage payment dollars as a percentage of median family income.

In the late 1980s and 1990s, the NAR numbers showed buyers of U.S. homes had, on average, spent about 21% of their typical incomes on their mortgages. By the end of 2018, “historically very low” mortgage rates had reduced that expenditure to just 17.1%! It was a set of circumstances that was saving American families many thousands of dollars.

But to Terrazas, that seemed too good to last. The title of 2018’s worrisome article (it appeared in Zillow Research) was “Rising Mortgage Rates Threaten Housing Affordability and Inventory.

And now, two-and-a-half years later, given today’s national inventory shortage and red-hot price increases, the 2018 question is especially relevant. How seriously has the threat to housing affordability come to pass?

The question is answerable—but probably surprising, given last week’s well-publicized news that average selling prices were a full 23% higher this spring than last. The answer is ‘what affordability gap?’

As of the end of April, the NAR’s affordability index has actually improved since 2018! The then-current mortgage interest rate (the “threatened” rate) was 4.3%. Today, instead of having risen, it’s lower. And the affordability index, taking real median household income, home prices, and interest rate yields, is 16.0%. That’s 1.1% lower than 2018’s year-end calculation.

It might explain why today’s U.S. buyers have been grabbing the homes that are offered at a rapid clip—perhaps reflecting a seller’s market that also makes sense for buyers! If your own affordability calculations are similar—now’s the time to give us a call!

We are built on a philosophy of Heritage & Hustle. The L3 is a full service real estate agency with a regional office located in the heart of #CostaMesa, offering a wide-array of custom services to meet their clients’ needs with roots in the community since 1976.  It’s L3 mission is to provide trusted, convenient, responsive service to ensure clients enjoy their real estate experience. The L3 was originally formed to offer personal, concierge-level service as an alternative to the large, nationally based real estate companies. From its small beginnings of only two employees, The L3 has grown to a full staff of 25 serving over 300 clients a year. The L3 is not limited to serving just its clients; it is also committed to serving the community. Not only has The L3 donated hundreds of hours to many area charities, they have also received the prestige of being named one of the #toprealestatecompaniesinCostaMesa  If you’re interested in #buyingorsellinginOrangeCounty, turn to the experts. Turn to The L3 and let them help you make your real estate buying or selling dreams come true. For more information or to get started on finding or selling your home contact The L3 today at 714-444-4663 or email us at






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