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California Housing Affordability Holds Steady in Fourth Quarter C.A.R. Reports

Published Wednesday, February 12, 2020
  • Thirty-one percent of California households could afford to purchase the $607,040 median-priced home in the fourth quarter of 2019, unchanged from third-quarter 2019 and up from 28 percent a year ago.
     
  • A minimum annual income of $119,600 was needed to make monthly payments of $2,990, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 3.89 percent interest rate.
     
  • Forty-one percent of home buyers were able to purchase the $480,000 median-priced condo or townhome. An annual income of $94,400 was required to make a monthly payment of $2,360.

 

LOS ANGELES (Feb. 12) – Slightly higher mortgage interest rates offset steady home prices and held California housing affordability constant during the fourth quarter of 2019. However, more Californians could afford a home purchase compared to a year ago, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in fourth-quarter 2019 was unchanged from the third quarter of 2019 at 31 percent but was up from 28 percent in the fourth quarter a year ago, according to C.A.R.’s Traditional Housing Affordability Index (HAI). California’s housing affordability index hit a peak of 56 percent in the fourth quarter of 2012.

C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. C.A.R. also reports affordability indices for regions and select counties within the state. The index is considered the most fundamental measure of housing well-being for home buyers in the state.

A minimum annual income of $119,600 was needed to qualify for the purchase of a $607,040 statewide median-priced, existing single-family home in the fourth quarter of 2019. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,990, assuming a 20 percent down payment and an effective composite interest rate of 3.89 percent. The effective composite interest rate was 3.85 percent in third-quarter 2019 and 4.95 percent a year ago.

Housing affordability for condominiums and townhomes also improved from a year ago but decreased compared to the third quarter of 2019 because of higher median condominium prices. Forty-one percent of California households earned the minimum income to qualify for the purchase of a $480,000 median-priced condominium/townhome, down from 43 percent in the previous quarter. An annual income of $94,400 was required to make monthly payments of $2,360. Thirty-seven percent of households could afford to buy a condominium/townhome a year ago.

Compared with California, more than half of the nation’s households (57 percent) could afford to purchase a $274,900 median-priced home, which required a minimum annual income of $54,000 to make monthly payments of $1,350.

Key points from the fourth-quarter 2019 Housing Affordability report include:

  • When compared to a year ago, housing affordability improved in 44 tracked counties and declined in four counties. Affordability remained flat in one county.
  • In the San Francisco Bay Area, affordability improved from fourth-quarter 2018 in every county. San Francisco County was the least affordable, with just 18 percent of households able to purchase the $1,600,000 median-priced home. Forty-seven percent of Solano County households could afford the $460,000 median-priced home, making it the most affordable Bay Area county.
  • Affordability also improved in all Southern California regions, with Orange County being the least affordable (26 percent) and San Bernardino County being the most affordable (51 percent).
  • All counties in the Central Valley region experienced an increase in affordability from a year ago. San Benito County (34 percent) was the least affordable and Kings County (55 percent) was the most affordable.
  • Housing affordability improved in three of four counties in the Central Coast region with Santa Cruz experiencing the biggest improvement in affordability — jumping to 21 percent in fourth-quarter 2019 from 12 percent a year ago. Santa Barbara County was the only county in the region with a year-over-year decline in affordability, with the index dipping to 23 percent in fourth-quarter 2019 from 26 percent a year ago.
  • During the fourth quarter of 2019, the most affordable counties in California were Lassen (63 percent), Kings (55 percent) and Tulare and Plumas (52 percent). The minimum annual income needed to qualify for a home in these counties was less than $54,000.
  • San Francisco (18 percent), San Mateo (20 percent) and Santa Cruz (21 percent) counties were the least affordable areas in the state. San Francisco County required the highest minimum qualifying income in the entire state. An annual income of $314,800 was needed to purchase a home in San Francisco County.
  • San Mateo County also required an annual income exceeding $300,000 to purchase a median-priced home. 

See C.A.R.’s historical housing affordability data.
See first-time buyer housing affordability data.
 

Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

 

 

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