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Second quarter 2016 housing affordability

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For release:
August 10, 2016

Strong seasonal home prices weaken housing affordability in second quarter

Minimum annual income required to purchase hits six digits for first time since Great Recession

• Thirty-one percent of California households could afford to purchase the $516,220 median-priced home in the second quarter, down from 34 percent in first-quarter 2016 and up from 30 percent in second-quarter 2015.

• A minimum annual income of $101,217 was needed to make monthly payments of $2,530, including principal, interest, and taxes on a 30-year fixed-rate mortgage at 3.85 percent interest rate.

• Forty percent of home buyers were able to purchase the $411,390 median-priced condo or townhome. An annual income of $80,663 was required to make a monthly payment of $2,017.

LOS ANGELES (Aug. 10) – Lower interest rates failed to offset strong seasonal price increases, making it harder for Californians to purchase a home in the second quarter of 2016, 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 second-quarter 2016 fell to 31 percent from the 34 percent recorded in the first quarter of 2016 and was up from 30 percent in second-quarter 2015, according to C.A.R.’s Traditional Housing Affordability Index (HAI). This is the 13th consecutive quarter that the index has been below 40 percent and is near the mid-2008 low level of 29 percent.  California’s housing affordability index hit a peak of 56 percent in the first 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.

Home buyers needed to earn a minimum annual income of $101,217 to qualify for the purchase of a $516,220 statewide median-priced, existing single-family home in the second quarter of 2016.  The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,530, assuming a 20 percent down payment and an effective composite interest rate of 3.85 percent.  The effective composite interest rate in first-quarter 2016 was 4.01 percent and 3.95 percent in the second quarter of 2015. 

Homes were slightly more affordable in second-quarter 2016 compared to a year ago, when the affordability index stood at 30 and the median home price was $488,500. An annual income of $96,650 was needed to make monthly payments of $2,420. 

Condominiums and townhomes also were slightly less affordable than in the previous quarter. Forty percent of California households earned the minimum income to qualify for the purchase of a condominium or townhome in the second quarter of 2016, down from 41 percent in the first quarter of 2016. An annual income of 80,663 was required to make monthly payments of $2,017.

Key points from the second-quarter 2016 Housing Affordability report include:

• Compared to affordability in first-quarter 2016, 25 of 29 counties tracked saw a decrease in housing affordability, two experienced an improvement (Napa and San Luis Obispo), and two were unchanged (San Francisco and Madera).

• Seven of nine Bay Area counties recorded lower affordability numbers as did all six Southern California regions. Nine of 10 Central Valley counties and three of four Central Coast counties also saw lower affordability, compared to the previous quarter. 

• During the second quarter of 2016, the most affordable counties in California were Kings (56 percent); San Bernardino (56 percent); Kern (54 percent); and Fresno, Madera, and Tulare all at 50 percent.

• San Francisco (13 percent), San Mateo (14 percent), and Santa Cruz (17 percent) counties were the least affordable areas of the state.  

Housing Affordability slides (click link to open)

Affordability peak versus current
Annual required income peak vs. current
PITI peak versus current
Regional comparison (2006-2016)


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 185,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

# # #

 
CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
Second quarter 2016

C.A.R. Region Housing
Affordability Index
Median Home
Price
Monthly Payment Including Taxes & Insurance Minimum
Qualifying Income
CA SFH  31  $        516,220  $              2,530  $       101,217
CA Condo/Townhomes 40  $        411,390  $              2,017  $         80,663
Los Angeles Metropolitan Area 33  $        470,330  $              2,305  $         92,219
Inland Empire 46  $        315,500  $              1,547  $         61,861
S.F. Bay Area 23  $        840,920  $              4,122  $       164,882
US 57  $        240,700  $              1,180  $         47,195
         
S.F. Bay Area        
Alameda 20  $        825,700  $              4,047  $       161,898
Contra-Costa 32  $        628,150  $              3,079  $       123,164
Marin 18  $     1,225,000  $              6,005  $       240,190
Napa 25  $        630,000  $              3,088  $       123,526
San Francisco 13  $     1,375,000  $              6,740  $       269,601
San Mateo 14  $     1,330,000  $              6,519  $       260,778
Santa Clara 19  $     1,085,000  $              5,318  $       212,740
Solano 45  $        386,000  $              1,892  $         75,684
Sonoma 26  $        585,000  $              2,868  $       114,703
Southern California        
Los Angeles 30  $        480,040  $              2,353  $         94,123
Orange County 22  $        742,220  $              3,638  $       145,530
Riverside County 41  $        355,320  $              1,742  $         69,669
San Bernardino 56  $        242,370  $              1,188  $         47,522
San Diego 26  $        589,910  $              2,892  $       115,666
Ventura 29  $        647,320  $              3,173  $       126,922
Central Coast        
Monterey 25  $        535,000  $              2,622  $       104,899
San Luis Obispo 27  $        546,620  $              2,679  $       107,178
Santa Barbara 20  $        703,460  $              3,448  $       137,930
Santa Cruz 17  $        799,000  $              3,917  $       156,663
Central Valley        
Fresno 50  $        235,020  $              1,152  $         46,081
Kern (Bakersfield) 54  $        228,950  $              1,122  $         44,891
Kings County 56  $        212,660  $              1,042  $         41,697
Madera 50  $        221,700  $              1,087  $         43,469
Merced 52  $        212,080  $              1,040  $         41,583
Placer County 46  $        438,490  $              2,149  $         85,976
Sacramento 45  $        323,710  $              1,587  $         63,471
San Joaquin 45  $        313,840  $              1,538  $         61,536
Stanislaus 48  $        271,940  $              1,333  $         53,320
Tulare 50  $        207,700  $              1,018  $         40,724

 

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
Second quarter 2016

STATE/REGION/COUNTY Q2 2016 Q1 2016   Q2 2015  
CA SFH  31 34   30  
CA Condo/Townhomes 40 41   39  
Los Angeles Metropolitan Area 33 35   32  
Inland Empire 46 48   46  
S.F. Bay Area 23 27   23 R
US 57 60   57  
           
S.F. Bay Area          
Alameda 20 23   20 R
Contra-Costa 32 38   34 R
Marin 18 20   17  
Napa 25 23 R 24 R
San Francisco 13 13   10  
San Mateo 14 16   13  
Santa Clara 19 22   19  
Solano 45 48 R 46  
Sonoma 26 28 R 27 R
Southern California          
Los Angeles 30 31   30  
Orange County 22 23   21  
Riverside County 41 42   40  
San Bernardino 56 57   56  
San Diego 26 28   25  
Ventura 29 30   25  
Central Coast          
Monterey 25 27   27  
San Luis Obispo 27 26   28  
Santa Barbara 20 21   15 R
Santa Cruz 17 18   20  
Central Valley          
Fresno 50 52   50  
Kern (Bakersfield) 54 55   54 -
Kings County 56 58   62  
Madera 50 50   50  
Merced 52 55   55  
Placer County 46 48   44  
Sacramento 45 48   47  
San Joaquin 45 47   37  
Stanislaus 48 50   41  
Tulare 50 52   54  

R = revised

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
Second quarter 2016

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