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2nd Qtr Housing affordability report

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For release:
August 9, 2017

Higher housing prices and tight inventory drag down California housing affordability; income required to buy doubles in five years

• Twenty-nine percent of California households could afford to purchase the $553,260 median-priced home in the second quarter of 2017, down from 32 percent in first-quarter 2017 and down from 31 percent in second-quarter 2016.

• A minimum annual income of $110,890 was needed to make monthly payments of $2,770, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.09 percent interest rate.

• Thirty-eight percent of home buyers were able to purchase the $443,400 median-priced condo or townhome. An annual income of $88,870 was required to make a monthly payment of $2,220.

LOS ANGELES (Aug. 9) – Higher home prices resulting from a severe lack of homes for sale and high demand during the hot home-buying season eroded California’s housing affordability in the second quarter, 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 2017 fell to 29 percent, down from 32 percent in the first quarter of 2017 and down from 31 percent in the second quarter a year ago, according to C.A.R.’s Traditional Housing Affordability Index (HAI). This is the 17th consecutive quarter that the index has been below 40 percent and the lowest since third-quarter 2015. 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.

A minimum annual income of $110,890 was needed to qualify for the purchase of a $553,260 statewide median-priced, existing single-family home in the second quarter of 2017. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,770, assuming a 20 percent down payment and an effective composite interest rate of 4.09 percent. The effective composite interest rate in first-quarter 2017 was 4.36 percent and 3.85 percent in the second quarter of 2016. 

Home prices have nearly doubled since affordability reached its highest level five years ago, and compared to then, home buyers now need twice the income to purchase a median-priced home. In the first quarter of 2012, buyers statewide needed a minimum annual income of $56,320 to purchase a home that was priced $279,190. And in the San Francisco Bay Area, a home buyer needed a minimum annual income of $90,370 to purchase a $447,970 priced home just five years ago. Compare that to the current minimum income of $179,390 needed to purchase an $895,000 priced home now.

Condominiums and townhomes also were less affordable in second-quarter 2017 compared to the previous quarter. Thirty-eight percent of California households earned the minimum income to qualify for the purchase of a $443,400 median-priced condominium/townhome in the second quarter of 2017, and an annual income of $88,870 was required to make monthly payments of $2,220. Forty percent of households could afford to purchase the $414,840 priced condo or townhome in first-quarter 2017.

Key points from the second-quarter 2017 Housing Affordability report include:

• Compared to affordability in first-quarter 2017, only six of 43 counties tracked posted an improvement in housing affordability (Napa, Santa Barbara, San Benito, Mariposa/Tuolumne, Mendocino, and Sutter), 29 experienced a decline (Alameda, Contra Costa, Marin, San Francisco, San Mateo, Santa Clara, Solano, Los Angeles, San Bernardino, San Diego, Ventura, Monterey, Fresno, Kern, Kings, Madera, Merced, Placer, Sacramento, San Joaquin, Stanislaus, Amador, Butte, El Dorado, Lake, Mendocino, Shasta, Yolo, Yuba), and eight were unchanged (Sonoma, Orange, Riverside, San Luis Obispo, Santa Cruz, Tulare, Humboldt, and Sutter).

• During the second quarter of 2017, the most affordable counties in California were Tehama (57 percent), Kern (54 percent), Sutter, (53 percent), Kings and Tulare (both at 52 percent).

• San Francisco (12 percent), San Mateo (14 percent), and Santa Barbara (16 percent), Santa Clara and Santa Cruz (both at 17 percent) counties were the least affordable areas in the state.  

• Housing affordability figures are now available for the following counties: Amador, Butte, El Dorado, Humboldt, Lake, Mariposa and Tuolumne (combined), Mendocino, San Benito, Shasta, Siskiyou, Sutter, Tehama, Yolo, and Yuba. See accompanying tables.

Housing Affordability slides (click link to open)

Affordability peak versus current
Annual required income peak vs. current
PITI peak versus current
Median home price peak vs. current
CA housing affordability by quarter (2006-2017)
Housing affordability by county


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 than190,000 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 2017

C.A.R. Region Housing
Affordability Index
Median Home
Price
Monthly Payment Including Taxes & Insurance Minimum
Qualifying Income
CA SFH (SAAR) 29  $     553,260  $        2,770  $   110,890
CA Condo/Townhomes 38  $     443,400  $        2,220  $      88,870
Los Angeles Metro Area 31  $     491,250  $        2,460  $      98,470
Inland Empire 43  $     342,050  $        1,710  $      68,560
S.F. Bay Area 21  $     895,000  $        4,480  $   179,390
         
S.F. Bay Area        
Alameda 19  $     880,000  $        4,410  $   176,390
Contra-Costa (Central Cty) 31  $     655,000  $        3,280  $   131,290
Marin 17  $ 1,302,500  $        6,530  $   261,070
Napa 25  $     683,000  $        3,420  $   136,900
San Francisco 12  $ 1,450,000  $        7,270  $   290,630
San Mateo 14  $ 1,469,000  $        7,360  $   294,440
Santa Clara 17  $ 1,183,440  $        5,930  $   237,210
Solano 44  $     412,000  $        2,060  $      82,580
Sonoma 25  $     625,000  $        3,130  $   125,270
Southern California        
Los Angeles 28  $     514,220  $        2,580  $   103,070
Orange County 21  $     788,000  $        3,950  $   157,950
Riverside County 39  $     380,000  $        1,900  $      76,170
San Bernardino 51  $     269,640  $        1,350  $      54,050
San Diego 26  $     605,000  $        3,030  $   121,260
Ventura 27  $     635,000  $        3,180  $   127,280
Central Coast        
Monterey 21  $     603,000  $        3,020  $   120,860
San Luis Obispo 26  $     565,000  $        2,830  $   113,250
Santa Barbara 16  $     750,000  $        3,760  $   150,330
Santa Cruz 17  $     850,000  $        4,260  $   170,370
Central Valley        
Fresno 47  $     250,000  $        1,250  $      50,110
Kern (Bakersfield) 54  $     232,500  $        1,170  $      46,600
Kings County 52  $     225,000  $        1,130  $      45,100
Madera 44  $     259,900  $        1,300  $      52,090
Merced 48  $     248,000  $        1,240  $      49,710
Placer County 43  $     465,000  $        2,330  $      93,200
Sacramento 45  $     340,000  $        1,700  $      68,150
San Benito 33  $     530,000  $        2,660  $   106,230
San Joaquin 43  $     336,940  $        1,690  $      67,540
Stanislaus 47  $     288,500  $        1,450  $      57,830
Tulare 52  $     220,000  $        1,100  $      44,100
Other Counties in California        
Amador 42  $     340,000  $        1,700  $      68,150
Butte County 39  $     305,850  $        1,530  $      61,300
El Dorado County 40  $     480,000  $        2,410  $      96,210
Humboldt 36  $     299,000  $        1,500  $      59,930
Lake County 38  $     250,000  $        1,250  $      50,110
Mariposa And Tuolumne 46  $     284,390  $        1,430  $      57,000
Mendocino 27  $     400,000  $        2,000  $      80,180
Shasta 47  $     259,900  $        1,300  $      52,090
Siskiyou County 47  $     216,500  $        1,080  $      43,390
Sutter 53  $     271,000  $        1,360  $      54,320
Tehama 57  $     202,000  $        1,010  $      40,490
Yolo 35  $     430,000  $        2,150  $      86,190
Yuba 43  $     270,000  $        1,350  $      54,120

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
Second Quarter 2017

STATE/REGION/COUNTY Q2 2017 Q1 2017   Q2 2016  
CA SFH (SAAR) 29 32   31  
CA Condo/Townhomes 38 40   40  
Los Angeles Metropolitan Area 31 33   33  
Inland Empire 43 43   46  
S.F. Bay Area 21 25   23 r
           
S.F. Bay Area          
Alameda 19 21   23 r
Contra-Costa (Central County) 31 37   35 r
Marin 17 18   18  
Napa 25 24   26  
San Francisco 12 13   13  
San Mateo 14 15   14  
Santa Clara 17 19   19  
Solano 44 45   45  
Sonoma 25 25   26  
Southern California          
Los Angeles 28 29   30  
Orange County 21 21   22  
Riverside County 39 39   41  
San Bernardino 51 52   56  
San Diego 26 28   28 r
Ventura 27 28 r 33 r
Central Coast          
Monterey 21 23   25  
San Luis Obispo 26 26   27  
Santa Barbara 16 14   19 r
Santa Cruz 17 17   17  
Central Valley          
Fresno 47 48   48 r
Kern (Bakersfield) 54 55   55 r
Kings County 52 53   54 r
Madera 44 47   51 r
Merced 48 50   51 r
Placer County 43 45   47 r
Sacramento 45 46   46 r
San Benito 33 32   36  
San Joaquin 43 45   45  
Stanislaus 47 48   48  
Tulare 52 52   50  
Other Counties in California          
Amador 42 47   50  
Butte County 39 41   43  
El Dorado County 40 43   38  
Humboldt 36 36   42 r
Lake County 38 43   44  
Mariposa And Tuolumne 46 45   51  
Mendocino 27 26   34 r
Shasta 47 49   48 r
Siskiyou County 47 48   54 r
Sutter 53 53   55 r
Tehama 57 55   60  
Yolo 35 37   36 r
Yuba 43 44   47 r

r = revised


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