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California housing affordability inches up in fourth quarter 2018, C.A.R. reports

Tuesday, February 12, 2019  
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·        Twenty-eight percent of California households could afford to purchase the $564,270 median- 

priced home in the fourth quarter of 2018, up from 27 percent in third-quarter 2018 but down from 29 percent a year ago.

·        A minimum annual income of $122,340 was needed to make monthly payments of $3,060, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.95 percent interest rate.

·        Thirty-seven percent of home buyers were able to purchase the $460,000 median-priced condo or townhome. An annual income of $99,730 was required to make a monthly payment of $2,490.

 

LOS ANGELES (Feb. 12) – Lower seasonal home prices allowed more Californians to afford a home purchase in the fourth quarter of 2018 compared to the previous quarter, but higher interest rates pushed affordability lower compared to the previous year, 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 2018 edged up to 28 percent from 27 percent in the third quarter of 2018 but was down from 29 percent in the fourth quarter a year ago, according to C.A.R.’s Traditional Housing Affordability Index (HAI). The index has been below 30 percent for six 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 $122,340 was needed to qualify for the purchase of a $564,270 statewide median-priced, existing single-family home in the fourth quarter of 2018. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,060, assuming a 20 percent down payment and an effective composite interest rate of 4.95 percent. The effective composite interest rate was 4.77 percent in third-quarter 2018 and 4.17 percent in fourth-quarter 2017. 

 

Housing affordability for condominiums and townhomes also edged up in fourth-quarter 2018 compared to the previous quarter with 37 percent of California households earning the minimum income to qualify for the purchase of a $460,000 median-priced condominium/townhome, up from 36 percent in the third quarter. An annual income of $99,730 was required to make monthly payments of $2,490. Thirty-eight percent of households could afford to buy a condominium/townhome a year ago.

 

Compared with California, more than half of the nation’s households (54 percent) could afford to purchase a $257,600 median-priced home, which required a minimum annual income of $55,850 to make monthly payments of $1,400.

 

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

  • Housing affordability improved from fourth-quarter 2017 in 10 tracked counties and declined in 30 counties. Affordability in eight counties remained flat.

 

  • In the San Francisco Bay Area, affordability improved from a year ago in Marin, San Francisco, San Mateo and Santa Clara counties, while Contra Costa and Solano counties saw a decline in housing affordability. Affordability held steady from a year ago in Alameda, Napa and Sonoma counties.

 

  • All but one county in the Southern California region posted a decrease in affordability compared to a year ago. Affordability declined in Los Angeles, Orange, Riverside, San Bernardino and San Diego counties. Only Ventura County recorded an improvement.

 

  • In the Central Valley Region, affordability held even only in two counties — Fresno and Stanislaus — while it fell from fourth-quarter 2017 in Kern, Kings, Madera, Merced, Placer, Sacramento, San Benito, San Joaquin and Tulare counties.

 

  • In the Central Coast region, affordability dropped from a year ago in San Luis Obispo and Santa Cruz but was unchanged in Monterey County. Housing affordability in Santa Barbara County jumped from 18 percent in fourth-quarter 2017 to 32 percent in fourth-quarter 2018, primarily due to a sharp drop in the median home price, which fell from $710,000 in fourth-quarter 2017 to $514,950 in fourth-quarter 2018.

 

  • During the fourth quarter of 2018, the most affordable counties in California were Lassen (66 percent), Kern (53 percent) and Kings and Siskiyou (both at 50 percent). The minimum annual income needed to qualify for a home in these counties was $52,030 or less.

 

  • Mono (12 percent), Santa Cruz (12 percent), San Mateo (15 percent), San Francisco (15 percent) and Santa Clara (18 percent) counties were the least affordable areas in the state. San Francisco and San Mateo counties had the highest minimum qualifying incomes in the state. An annual income of $326,290 was needed to purchase a home in San Francisco County, and an annual income of $329,300 was required in San Mateo County.

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 than 200,000 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 2018

STATE/REGION/COUNTY

4th Qtr 2018

3rd Qtr 2018

4th Qtr 2017

Median Home Price

Monthly Payment Including Taxes & Insurance

Minimum Qualifying Income

Calif. Single-family home

28

27

 

29

 

$564,270

$3,060

$122,340

Calif. Condo/Townhome

37

36

r

38

 

$460,000

$2,490

$99,730

Los Angeles Metro Area

30

30

 

31

 

$510,000

$2,760

$110,570

Inland Empire

40

41

 

43

 

$360,000

$1,950

$78,050

San Francisco Bay Area

22

21

 

21

 

$910,000

$4,930

$197,290

United States

54

53

 

56

 

$257,600

$1,400

$55,850

 

 

 

 

 

 

 

 

 

San Francisco Bay Area

 

 

 

 

 

 

 

 

Alameda

20

18

 

20

 

$890,000

$4,820

$192,960

Contra Costa

33

32

 

34

 

$638,000

$3,460

$138,320

Marin

19

19

 

18

 

$1,312,500

$7,110

$284,560

Napa

25

24

 

25

 

$714,000

$3,870

$154,800

San Francisco

15

15

 

12

 

$1,505,000

$8,160

$326,290

San Mateo

15

14

 

14

 

$1,518,890

$8,230

$329,300

Santa Clara

18

17

 

15

 

$1,250,000

$6,780

$271,010

Solano

39

38

 

44

 

$435,000

$2,360

$94,310

Sonoma

23

22

 

23

 

$640,000

$3,470

$138,760

Southern California

 

 

 

 

 

 

 

 

Los Angeles

24

22

 

25

 

$576,100

$3,120

$124,900

Orange

20

20

 

21

 

$799,000

$4,330

$173,230

Riverside

37

37

 

38

 

$400,000

$2,170

$86,720

San Bernardino

48

48

 

50

 

$295,000

$1,600

$63,960

San Diego

24

23

 

26

 

$625,950

$3,390

$135,710

Ventura

29

28

 

26

 

$649,000

$3,520

$140,710

Central Coast

 

 

 

 

 

 

 

 

Monterey

21

20

 

21

 

$615,000

$3,330

$133,340

San Luis Obispo

22

21

 

24

 

$620,650

$3,360

$134,560

Santa Barbara

32

26

 

18

 

$514,950

$2,790

$111,640

Santa Cruz

12

12

 

17

 

$885,000

$4,800

$191,870

Central Valley

 

 

 

 

 

 

 

 

Fresno

46

46

 

46

 

$269,000

$1,460

$58,320

Kern

53

53

 

54

 

$240,000

$1,300

$52,030

Kings

50

51

 

52

 

$231,000

$1,250

$50,080

Madera

47

48

 

49

 

$264,000

$1,430

$57,240

Merced

40

40

 

48

 

$270,950

$1,470

$58,740

Placer

42

42

 

44

 

$475,000

$2,570

$102,980

Sacramento

42

42

 

43

 

$363,000

$1,970

$78,700

San Benito

28

27

 

31

 

$586,000

$3,180

$127,050

San Joaquin

38

38

 

41

 

$365,000

$1,980

$73,130

Stanislaus

45

45

 

45

 

$312,500

$1,690

$67,750

Tulare

47

47

 

52

 

$235,000

$1,270

$50,950

Other Calif. Counties

 

 

 

 

 

 

 

 

Amador

NA

NA

 

44

 

NA

NA

NA

Butte

34

39

 

39

 

$339,500

$1,840

$73,610

Calaveras

45

43

 

50

 

$315,000

$1,710

$68,290

El Dorado

42

41

 

42

 

$474,000

$2,570

$102,770

Humboldt

33

33

 

34

 

$310,000

$1,680

$67,210

Lake

40

39

 

36

 

$259,000

$1,400

$56,150

Lassen

66

67

 

65

 

$175,000

$950

$37,940

Mariposa

38

40

 

48

 

$322,250

$1,750

$69,870

Mendocino

23

23

 

28

 

$420,000

$2,280

$91,060

Mono

12

11

 

19

 

$640,000

$3,470

$138,760

Nevada

35

32

 

39

 

$395,000

$2,140

$85,640

Plumas

42

44

 

45

 

$287,500

$1,560

$62,330

Shasta

45

44

 

47

 

$267,500

$1,450

$58,000

Siskiyou

50

47

 

51

 

$195,000

$1,060

$42,280

Sutter

44

45

 

52

 

$305,000

$1,650

$66,130

Tehama

46

49

 

56

 

$235,000

$1,270

$50,950

Tuolumne

48

41

 

48

 

$278,500

$1,510

$60,380

Yolo

37

35

 

34

 

$432,000

$2,340

$93,660

Yuba

44

48

 

42

 

$291,000

$1,580

$63,090

r = revised
NA = Not available


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