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2nd quarter housing affordability

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For release:
August 8, 2018

Higher home prices, rising interest rates depress California housing affordability
 

Housing affordability falls to 10-year lows, extending into traditionally more affordable regions

  • Twenty-six percent of California households could afford to purchase the $596,730 median-priced home in the second quarter of 2018, down from 31 percent in first-quarter 2018 and down from 29 percent a year ago.
  • A minimum annual income of $126,490 was needed to make monthly payments of $3,160, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.70 percent interest rate.
  • Thirty-six percent of home buyers were able to purchase the $477,790 median-priced condo or townhome. An annual income of $101,270 was required to make a monthly payment of $2,530.

LOS ANGELES (Aug. 8) – Record home price increases and higher interest rates combined to constrain California housing affordability to the lowest levels in 10 years, 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 2018 fell to 26 percent from 31 percent in the first quarter of 2018 and was down from 29 percent in the second quarter a year ago, according to C.A.R.’s Traditional Housing Affordability Index (HAI). This is the 21st consecutive quarter that the index has been below 40 percent. California’s housing affordability index hit a peak of 56 percent in the second 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 $126,490 was needed to qualify for the purchase of a $596,730 statewide median-priced, existing single-family home in the second quarter of 2018. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,160, assuming a 20 percent down payment and an effective composite interest rate of 4.70 percent. The effective composite interest rate in first-quarter 2018 was 4.44 percent and 4.09 percent in the second quarter of 2017. 

While low housing affordability may be typical in many Bay Area counties, more traditionally affordable areas were at 10-year lows in the second quarter. Those that reached the decade-low include Alameda, Merced, Orange, Riverside, Sacramento, San Bernardino, San Diego, San Mateo, Santa Clara, Santa Cruz, and Sonoma.

Housing affordability for condominiums and townhomes also fell in second-quarter 2018 compared to the previous quarter with 36 percent of California households earning the minimum income to qualify for the purchase of a $477,790 median-priced condominium/townhome, down from 39 percent in the first quarter. An annual income of $101,270 was required to make monthly payments of $2,530.

Key points from the second-quarter 2018 Housing Affordability report include:

  • Housing affordability improved from second-quarter 2017 in 8 tracked counties and declined in 37 counties. Affordability in four counties remained flat. 
  • In the San Francisco Bay Area, affordability improved from a year ago in San Francisco and Marin counties, primarily due to higher wages. Affordability fell in five counties (Alameda, Contra Costa, Santa Clara, Solano, and Sonoma). Affordability held steady in Napa and San Mateo counties. 
  • In Southern California, affordability improved only in Ventura, and dropped in five counties (Los Angeles, Orange, Riverside, San Bernardino, and San Diego) compared to a year ago. 
  • In the Central Valley, only Madera County saw an improvement in affordability from second-quarter 2017. Housing affordability decreased from a year ago in nine counties (Kern, Kings, Merced, Placer, Sacramento, San Benito, San Joaquin, Stanislaus and Tulare). Affordability held steady only in Fresno County. 
  • In the Central Coast region, only Santa Barbara experienced a year-to-year improvement in affordability, while three counties (Monterey, San Luis Obispo, and Santa Cruz) posted a decline. 
  • During the second quarter of 2018, the most affordable counties in California were Lassen (64 percent), Kern (53 percent), Madera (52 percent), Tehama (51 percent) andKings (50 percent). 
  • Santa Cruz (12 percent), San Francisco, San Mateo, and Mono (all at 14 percent), and Alameda and Santa Clara (both at 16 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
Monthly PITI peak versus current
Affordability by region peak versus current
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 2018

STATE/REGION/COUNTY

2nd Qtr.

2018

Median Home Price

Monthly Payment Including Taxes & Insurance

Minimum Qualifying Income

Calif. Single-family Home

26

$596,730

$3,160

$126,490

Calif. Condo/Townhome

36

$477,790

$2,530

$101,270

Los Angeles Metro Area

29

$530,000

$2,810

$112,340

Inland Empire

41

$360,000

$1,910

$76,310

San Francisco Bay Area

18

$1,035,000

$5,480

$219,380

United States

53

$269,000

$1,430

$57,020

 

 

 

 

 

San Francisco Bay Area

 

 

 

 

Alameda

16

$1,000,000

$5,300

$211,960

Contra Costa

29

$695,000

$3,680

$147,320

Marin

18

$1,400,000

$7,420

$296,750

Napa

25

$707,250

$3,750

$149,910

San Francisco

14

$1,625,000

$8,610

$344,440

San Mateo

14

$1,650,000

$8,740

$349,740

Santa Clara

16

$1,405,000

$7,450

$297,810

Solano

38

$450,000

$2,380

$95,380

Sonoma

20

$695,000

$3,680

$147,320

Southern California

 

 

 

 

Los Angeles

26

$557,220

$2,950

$118,110

Orange

20

$830,000

$4,400

$175,930

Riverside

37

$405,000

$2,150

$85,850

San Bernardino

49

$290,000

$1,540

$61,470

San Diego

23

$645,000

$3,420

$136,720

Ventura

28

$670,000

$3,550

$142,020

Central Coast

 

 

 

 

Monterey

19

$647,000

$3,430

$137,140

San Luis Obispo

22

$618,500

$3,280

$131,100

Santa Barbara

20

$695,000

$3,680

$147,320

Santa Cruz

12

$905,000

$4,800

$191,830

Central Valley

 

 

 

 

Fresno

47

$268,390

$1,420

$56,890

Kern

53

$244,000

$1,290

$51,720

Kings

50

$235,000

$1,250

$49,810

Madera

52

$238,000

$1,260

$50,450

Merced

42

$265,000

$1,400

$56,170

Placer

41

$495,900

$2,630

$105,110

Sacramento

41

$374,000

$1,980

$79,270

San Benito

30

$571,000

$3,030

$121,030

San Joaquin

38

$373,380

$1,980

$79,140

Stanislaus

45

$315,000

$1,670

$66,770

Tulare

48

$233,000

$1,230

$49,390

Other Calif. Counties

 

 

 

 

Amador

44

$335,000

$1,780

$71,010

Butte

38

$320,000

$1,700

$67,830

Calaveras

43

$329,000

$1,740

$69,740

El Dorado

38

$525,000

$2,780

$111,280

Humboldt

33

$315,000

$1,670

$66,770

Lake County

37

$283,000

$1,500

$59,990

Lassen

64

$192,500

$1,020

$40,800

Mariposa

39

$320,000

$1,700

$67,830

Mendocino

22

$430,000

$2,280

$91,140

Mono

14

$624,500

$3,310

$132,370

Nevada

32

$435,000

$2,310

$92,200

Plumas

42

$297,000

$1,570

$62,950

Shasta

46

$265,500

$1,410

$56,280

Siskiyou

48

$207,500

$1,100

$43,980

Sutter

45

$299,950

$1,590

$63,580

Tehama

51

$215,900

$1,140

$45,760

Tuolumne

43

$308,500

$1,630

$65,390

Yolo

33

$469,500

$2,490

$99,520

Yuba

45

$290,000

$1,540

$61,470


 

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
Second quarter 2018

STATE/REGION/COUNTY

2nd Qtr. 2018

1st Qtr. 2018

 

2nd Qtr. 2017

Calif. Single-family home

26

31

 

29

 

Calif. Condo/Townhome

36

39

 

38

 

Los Angeles Metro Area

29

32

 

31

 

Inland Empire

41

43

 

43

 

San Francisco Bay Area

18

23

 

21

 

United States

53

57

 

55

 

 

 

 

 

 

 

San Francisco Bay Area

 

 

 

 

 

Alameda

16

22

 

19

 

Contra Costa

29

36

 

31

 

Marin

18

18

 

17

 

Napa

25

28

 

25

 

San Francisco

14

15

 

12

 

San Mateo

14

15

 

14

 

Santa Clara

16

17

 

17

 

Solano

38

42

 

44

 

Sonoma

20

21

 

25

 

Southern California

 

 

 

 

 

Los Angeles

26

28

 

28

 

Orange

20

21

 

21

 

Riverside

37

39

 

39

 

San Bernardino

49

52

 

51

 

San Diego

23

26

 

26

 

Ventura

28

31

 

27

 

Central Coast

 

 

 

 

 

Monterey

19

23

 

21

 

San Luis Obispo

22

25

 

26

 

Santa Barbara

20

22

 

16

 

Santa Cruz

12

15

 

17

 

Central Valley

 

 

 

 

 

Fresno

47

49

 

47

 

Kern

53

56

 

54

 

Kings

50

52

 

52

 

Madera

52

50

 

44

 

Merced

42

43

 

48

 

Placer

41

44

 

43

 

Sacramento

41

44

 

45

 

San Benito

30

32

 

33

 

San Joaquin

38

40

 

43

 

Stanislaus

45

48

 

47

 

Tulare

48

50

 

52

 

Other Calif. Counties

 

 

 

 

 

Amador

44

45

 

42

 

Butte

38

41

 

39

 

Calaveras

43

46

 

49

 

El Dorado

38

42

 

40

 

Humboldt

33

36

 

36

 

Lake County

37

40

 

38

 

Lassen

64

68

 

64

 

Mariposa

39

44

 

50

r

Mendocino

22

25

 

27

 

Mono

14

8

 

25

 

Nevada

32

37

 

39

 

Plumas

42

47

 

47

 

Shasta

46

49

 

47

 

Siskiyou

48

48

 

47

 

Sutter

45

49

 

53

 

Tehama

51

51

 

57

 

Tuolumne

43

49

 

46

 

Yolo

33

41

 

35

 

Yuba

45

49

 

43

 

r = revised

 

 


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