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4th Qtr 2016 Housing Affordability

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For release:
February 9, 2017

Higher wages and seasonal price declines hold California housing affordability in check

• Thirty-one percent of California households could afford to purchase the $511,360 median-priced home in the fourth quarter, unchanged from third-quarter 2016 and up from 30 percent in fourth-quarter 2015.

• A minimum annual income of $100,800 was needed to make monthly payments of $2,520, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 3.91 percent interest rate.

• Forty percent of home buyers were able to purchase the $413,700 median-priced condo or townhome. An annual income of $81,550 was required to make a monthly payment of $2,040.

LOS ANGELES (Feb. 9) – Rising wages and seasonal price declines held California’s housing affordability steady in fourth-quarter 2016, even while interest rates rose moderately, 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 2016 remained at 31 percent, unchanged from the third quarter of 2016 but was up from 30 percent in fourth-quarter 2015, according to C.A.R.’s Traditional Housing Affordability Index (HAI). This is the 15th 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 third 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 $100,800 to qualify for the purchase of a $511,360 statewide median-priced, existing single-family home in the fourth quarter of 2016. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,520, assuming a 20 percent down payment and an effective composite interest rate of 3.91 percent. The effective composite interest rate in third-quarter 2016 was 3.76 percent and 4.07 percent in the fourth quarter of 2015. 

Homes were slightly more affordable in fourth-quarter 2016 compared to fourth-quarter 2015, when the affordability index stood at 30 and the median home price was $484,710. An annual income of $96,980 was needed to make monthly payments of $2,420. 

The affordability of condominiums and townhomes also was flat compare to the previous quarter. Forty percent of California households earned the minimum income to qualify for the purchase of a $413,700 median-priced condominium or townhome in the fourth quarter of 2016, and an annual income of $81,550 was required to make monthly payments of $2,040.

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

• Compared to affordability in third-quarter 2016, eight of 29 counties tracked saw an improvement in housing affordability (Contra Costa, Marin, Napa, Los Angeles, Ventura, Monterey, Santa Barbara, and Madera), 10 experienced a decline (San Francisco, Sonoma, Orange County, Riverside, San Bernardino, Santa Cruz, Kern, Kings, Merced, and San Joaquin), and 11 were unchanged (Alameda, San Mateo, Santa Clara, Solano,  San Diego, San Luis Obispo, Fresno, Placer, Sacramento, Stanislaus, and Tulare).

• Only three (Contra Costa, Marin, Napa) of nine Bay Area counties recorded higher affordability numbers than the previous quarter, as higher earning Bay Area workers drove up home prices. Housing affordability results were mixed in Southern California but largely declined in Central Valley counties (Kern, Kings, Merced, San Joaquin).

• During the fourth quarter of 2016, the most affordable counties in California were Kings (56 percent); Kern (55 percent); San Bernardino (54 percent); and Fresno (50 percent).

• San Francisco (13 percent), San Mateo (15 percent), and Santa Cruz (17 percent) counties were the least affordable areas in the state.  

Housing Affordability slides (click link to open)

Affordability peak versus current
Annual required income peak vs. current
PITI peak versus current
CA housing affordability by quarter (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 more than 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
Fourth quarter 2016

 

C.A.R. Region Housing
Affordability Index
Median Home
Price
Monthly Payment
Including Taxes & Insurance
Minimum
Qualifying Income
CA SFH  31  $           511,360  $               2,520  $           100,800
CA Condo/Townhomes 40  $           413,700  $               2,040  $             81,550
Los Angeles Metropolitan Area 34  $           463,050  $               2,280  $             91,280
Inland Empire 46  $           317,710  $               1,570  $             62,630
S.F. Bay Area 25  $           797,170  $               3,930  $           157,140
US 58  $           235,000  $               1,160  $             46,320
         
S.F. Bay Area        
Alameda 22  $           779,500  $               3,840  $           153,650
Contra-Costa 39  $           550,000  $               2,710  $           108,410
Marin 20  $       1,149,500  $               5,660  $           226,590
Napa 26  $           620,000  $               3,060  $           122,210
San Francisco 13  $       1,353,000  $               6,670  $           266,700
San Mateo 15  $       1,300,000  $               6,410  $           256,250
Santa Clara 22  $       1,005,000  $               4,950  $           198,100
Solano 45  $           392,500  $               1,930  $             77,370
Sonoma 26  $           589,000  $               2,900  $           116,100
Southern California        
Los Angeles 28  $           503,400  $               2,480  $             99,230
Orange County 22  $           745,160  $               3,670  $           146,880
Riverside County 41  $           356,380  $               1,760  $             70,250
San Bernardino 54  $           251,100  $               1,240  $             49,500
San Diego 26  $           593,040  $               2,920  $           116,900
Ventura 31  $           629,860  $               3,100  $           124,160
Central Coast        
Monterey 27  $           507,000  $               2,500  $             99,940
San Luis Obispo 25  $           566,550  $               2,790  $           111,680
Santa Barbara 21  $           681,340  $               3,360  $           134,300
Santa Cruz 17  $           800,000  $               3,940  $           157,690
Central Valley        
Fresno 50  $           237,300  $               1,170  $             46,780
Kern (Bakersfield) 55  $           225,810  $               1,110  $             44,510
Kings County 56  $           215,170  $               1,060  $             42,410
Madera 49  $           229,790  $               1,130  $             45,300
Merced 48  $           230,720  $               1,140  $             45,480
Placer County 46  $           434,720  $               2,140  $             85,690
Sacramento 45  $           324,300  $               1,600  $             63,930
San Joaquin 43  $           324,570  $               1,600  $             63,980
Stanislaus 48  $           276,000  $               1,360  $             54,400
Tulare 49  $           212,680  $               1,050  $             41,920

r = revised

 

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

STATE/REGION/COUNTY Q4 2016 Q3 2016   Q4 2015  
CA SFH  31 31   30  
CA Condo/Townhomes 40 40   39  
Los Angeles Metropolitan Area 34 34   32  
Inland Empire 46 46   45  
S.F. Bay Area 25 26 R 24  
US 58 57   58  
           
S.F. Bay Area          
Alameda 22 22   22  
Contra-Costa 39 37 R 38 R
Marin 20 19   17  
Napa 26 25   21  
San Francisco 13 14   11  
San Mateo 15 15   14  
Santa Clara 22 22   20  
Solano 45 45   46 R
Sonoma 26 27   28 R
Southern California          
Los Angeles 28 26   27  
Orange County 22 23   21  
Riverside County 41 42   39  
San Bernardino 54 55   53  
San Diego 26 26   25  
Ventura 31 30   26  
Central Coast          
Monterey 27 25   25  
San Luis Obispo 25 25   26  
Santa Barbara 21 20   20  
Santa Cruz 17 18   21  
Central Valley          
Fresno 50 50   49  
Kern (Bakersfield) 55 56   55  
Kings County 56 57   61  
Madera 49 47   48  
Merced 48 50   55  
Placer County 46 46   44  
Sacramento 45 45   46  
San Joaquin 43 44   46 R
Stanislaus 48 48   45 R
Tulare 49 49   54  

r = revised

 

 


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