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Third quarter housing affordability

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For release:
November 1, 2018

Flat home prices, stable interest rates lift California housing affordability,
 C.A.R. reports

  • Twenty-seven percent of California households could afford to purchase the $588,530 median-priced home in the third quarter of 2018, up from 26 percent in second-quarter 2018 and down from 28 percent a year ago.
  • A minimum annual income of $125,540 was needed to make monthly payments of $3,140, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.77 percent interest rate.
  • Thirty-five percent of home buyers were able to purchase the $479,390 median-priced condo or townhome. An annual income of $102,260 was required to make a monthly payment of $2,560.

LOS ANGELES (Nov. 1) – More Californians could afford to purchase a home in the third quarter as flat home prices and stable interest rates combined to improve California housing affordability, 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 third-quarter 2018 edged up to 27 percent from 26 percent in the second quarter of 2018 and was down from 28 percent in the third quarter a year ago, according to C.A.R.’s Traditional Housing Affordability Index (HAI). The index has been below 30 percent for five of the past eight quarters. 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 $125,540 was needed to qualify for the purchase of a $588,530 statewide median-priced, existing single-family home in the third quarter of 2018. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,140, assuming a 20 percent down payment and an effective composite interest rate of 4.77 percent. The effective composite interest rate in second-quarter 2018 was 4.7 percent and 4.16 percent in the third quarter of 2017.  

Conversely, housing affordability for condominiums and townhomes fell in third-quarter 2018 compared to the previous quarter with 35 percent of California households earning the minimum income to qualify for the purchase of a $479,390 median-priced condominium/townhome, down from 36 percent in the second quarter. An annual income of $102,260 was required to make monthly payments of $2,560.

Compared with California, more than half of the nation’s households (53 percent) could afford to purchase a $266,900 median-priced home, which required a minimum annual income of $56,930 to make monthly payments of $1,420. 

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

  • Housing affordability improved from third-quarter 2017 in 10 tracked counties and declined in 33 counties. Affordability in five 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 six counties (Alameda, Contra Costa, Napa, San Mateo, Solano, and Sonoma). Affordability held steady in Santa Clara County.
  • In Southern California, affordability improved only in Ventura, and dropped in four counties (Orange, Riverside, San Bernardino, and San Diego) compared to a year ago. Affordability in Los Angeles County was unchanged.
  • In the Central Valley, Fresno and Madera counties saw an improvement in affordability from third-quarter 2017. Housing affordability decreased from a year ago in eight counties (Kings, Merced, Placer, Sacramento, San Benito, San Joaquin, Stanislaus and Tulare). Affordability held steady only in Kern 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 third quarter of 2018, the most affordable counties in California were Lassen (67 percent), Kern and Kings (51 percent), Tehama (49 percent) and Yuba (48 percent).
  • Mono (11 percent), Santa Cruz (12 percent), San Mateo (14 percent), San Francisco (15 percent), and Santa Clara (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
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 second-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
Third quarter 2018

STATE/REGION/COUNTY

3rd Qtr

2018

2nd Qtr

2018

 

3rd Qtr

2017

Median Home Price

Monthly Payment Including Taxes & Insurance

Minimum Qualifying Income

Calif. Single-family home

27

26

 

28

 

$588,530

$3,140

$125,540

Calif. Condo/Townhome

35

36

 

38

 

$479,390

$2,560

$102,260

Los Angeles Metro Area

30

29

 

30

 

$526,000

$2,810

$112,200

Inland Empire

41

41

 

43

 

$362,500

$1,930

$77,330

San Francisco Bay Area

21

18

 

23

 

$950,000

$5,070

$202,650

United States

53

53

 

55

 

$266,900

$1,420

$56,930

 

 

 

 

 

 

 

 

 

San Francisco Bay Area

 

 

 

 

 

 

 

 

Alameda

18

16

 

20

 

$950,000

$5,070

$202,650

Contra Costa

32

29

 

33

 

$660,000

$3,520

$140,790

Marin

19

18

 

18

 

$1,300,000

$6,930

$277,310

Napa

24

25

 

26

 

$729,500

$3,890

$155,610

San Francisco

15

14

 

13

 

$1,600,000

$8,530

$341,300

San Mateo

14

14

 

15

 

$1,600,000

$8,530

$341,300

Santa Clara

17

16

 

17

 

$1,300,000

$6,930

$277,310

Solano

38

38

 

43

 

$455,000

$2,430

$97,060

Sonoma

22

20

 

25

 

$660,000

$3,520

$140,790

Southern California

 

 

 

 

 

 

 

 

Los Angeles

22

26

 

22

 

$628,940

$3,350

$134,160

Orange

20

20

 

21

 

$830,000

$4,430

$177,050

Riverside

37

37

 

38

 

$405,000

$2,160

$86,390

San Bernardino

48

49

 

51

 

$294,900

$1,570

$62,910

San Diego

23

23

 

26

 

$650,000

$3,470

$138,650

Ventura

28

28

 

27

 

$665,000

$3,550

$141,850

Central Coast

 

 

 

 

 

 

 

 

Monterey

20

19

 

22

 

$622,000

$3,320

$132,680

San Luis Obispo

21

22

 

23

 

$640,000

$3,410

$136,520

Santa Barbara

26

20

 

20

 

$599,500

$3,200

$127,880

Santa Cruz

12

12

 

17

 

$903,000

$4,820

$192,620

Central Valley

 

 

 

 

 

 

 

 

Fresno

46

46

r

45

 

$275,060

$1,470

$58,670

Kern

53

53

 

53

 

$246,000

$1,310

$52,480

Kings

51

50

 

52

 

$230,000

$1,230

$49,060

Madera

48

48

r

44

 

$260,000

$1,390

$55,460

Merced

40

42

 

47

 

$276,320

$1,470

$58,940

Placer

42

41

 

44

 

$480,000

$2,560

$102,390

Sacramento

42

41

 

43

 

$370,000

$1,970

$78,930

San Benito

27

30

 

31

 

$610,000

$3,250

$130,120

San Joaquin

38

38

 

41

 

$370,000

$1,970

$78,930

Stanislaus

45

45

 

46

 

$319,900

$1,710

$68,240

Tulare

47

48

 

51

 

$239,900

$1,280

$51,170

Other Calif. Counties

 

 

 

 

 

 

 

 

Amador

NA

44

 

44

 

NA

NA

NA

Butte

39

38

 

40

 

$315,000

$1,680

$67,190

Calaveras

43

43

 

44

 

$332,950

$1,780

$71,020

El Dorado

41

38

 

41

 

$489,500

$2,610

$104,420

Humboldt

33

33

 

33

 

$315,000

$1,680

$67,190

Lake County

39

37

 

38

 

$266,250

$1,420

$56,790

Lassen

67

64

 

64

 

$175,000

$930

$37,330

Mariposa

40

39

 

51

 

$315,000

$1,680

$67,190

Mendocino

23

22

 

28

 

$420,000

$2,240

$89,590

Mono

11

14

 

20

 

$675,000

$3,600

$143,990

Nevada

32

32

 

39

 

$429,500

$2,290

$91,620

Plumas

44

42

 

47

 

$282,000

$1,500

$60,150

Shasta

44

46

 

48

 

$275,000

$1,470

$58,660

Siskiyou

47

48

 

49

 

$214,200

$1,140

$45,690

Sutter

45

45

 

51

 

$298,500

$1,590

$63,670

Tehama

49

51

 

56

 

$223,950

$1,190

$47,770

Tuolumne

41

43

 

45

 

$318,000

$1,700

$67,830

Yolo

35

33

 

34

 

$450,000

$2,400

$95,990

Yuba

48

45

 

43

 

$270,000

$1,440

$57,590

r = revised
NA = Not available


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