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1st quarter 2016 California housing affordability

Strong wage growth and level home prices buoy California housing affordability

Twenty-two regions see improvement, with eight of nine Bay Area counties posting higher

• Thirty-four percent of California households could afford to purchase the $465,280 median-priced home in the first quarter, up from 30 percent in fourth-quarter 2015 and unchanged from 34 percent in first-quarter 2015.

• A minimum annual income of $92,571 was needed to make monthly payments of $2,314, including principal, interest, and taxes on a 30-year fixed-rate mortgage at 4.01 percent interest rate.

• Forty-one percent of home buyers were able to purchase the $389,910 median-priced condo or townhome. An annual income of $77,575 was required to make a monthly payment of $1,939.

LOS ANGELES (May 9) – Higher wages and lower seasonal home prices combined to push California housing affordability higher in the first quarter of 2016, compared to the previous quarter, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. Affordability was flat when compared to the previous year as rising home price offset income gains.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in first-quarter 2016 rose to 34 percent from the 30 percent recorded in the fourth quarter of 2015 and was unchanged from first-quarter 2015, according to C.A.R.’s Traditional Housing Affordability Index (HAI).  This is the 12th 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 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.

Home buyers needed to earn a minimum annual income of $92,571 to qualify for the purchase of a $465,280 statewide median-priced, existing single-family home in the first quarter of 2016.  The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,314, assuming a 20 percent down payment and an effective composite interest rate of 4.01 percent.  The effective composite interest rate in fourth-quarter 2015 was 4.07 percent and 3.97 percent in the first quarter of 2015.

The median home price was $483,810 in fourth-quarter 2015, and an annual income of $96,790 was needed to purchase a home at that price.

Condominiums and townhomes were also more affordable compared to the previous quarter. Forty-one percent of California households earned the minimum income to qualify for the purchase of a condominium or townhome in the first quarter of 2016, up from 39 percent from the last quarter of 2015. An annual income of $77,575 was required to make monthly payments of $1,939.

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

• Compared to affordability in fourth-quarter 2015, 22 of 29 counties tracked saw an improvement in housing affordability, three experienced declines, and four were unchanged.

• Affordability improved greatly in the Bay Area, with eight of nine counties seeing an improvement. Southern California, Central Coast, and the Central Valley also saw higher affordability, compared to the previous quarter.

• Housing affordability in Southern California improved from the previous quarter in every county, with Los Angeles, Ventura, and San Diego counties leading the way.

• During the first quarter of 2016, the five most affordable counties in California were Kings (58 percent), San Bernardino (57 percent), Merced (55 percent), and Kern (55 percent).

• San Francisco (13 percent), San Mateo (16 percent), and Santa Cruz (18 percent) counties were the least affordable areas of the state.

Housing Affordability slides (click link to open)

Affordability peak versus current*
Annual income peak versus current*
PITI peak versus current*
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 185,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

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CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index

C.A.R. Region Housing
Affordability Index
Median Home
Price
Monthly Payment Including Taxes & Insurance Minimum
Qualifying Income
CA SFH 34  $           465,280  $               2,314  $             92,571
CA Condo/Townhomes 41  $           389,910  $               1,939  $             77,575
Los Angeles Metropolitan Area 35  $           436,850  $               2,173  $             86,915
Inland Empire 48  $           297,850  $               1,481  $             59,259
S.F. Bay Area 27  $           723,060  $               3,596  $           143,858
US 60  $           217,600  $               1,082  $             43,293
S.F. Bay Area
Alameda 23  $           731,640  $               3,639  $           145,565
Contra-Costa 38  $           543,570  $               2,704  $           108,147
Marin 20  $       1,093,750  $               5,440  $           217,610
Napa 24  $           646,960  $               3,218  $           128,718
San Francisco 13  $       1,332,500  $               6,628  $           265,111
San Mateo 16  $       1,170,000  $               5,820  $           232,780
Santa Clara 22  $           970,000  $               4,825  $           192,989
Solano 47  $           368,610  $               1,833  $             73,338
Sonoma 26  $           583,210  $               2,901  $           116,034
Southern California
Los Angeles 31  $           458,900  $               2,283  $             91,302
Orange County 23  $           713,680  $               3,550  $           141,992
Riverside County 42  $           342,930  $               1,706  $             68,228
San Bernardino 57  $           233,490  $               1,161  $             46,455
San Diego 28  $           554,320  $               2,757  $           110,286
Ventura 30  $           622,520  $               3,096  $           123,855
Central Coast
Monterey 27  $           500,000  $               2,487  $             99,479
San Luis Obispo 26  $           540,830  $               2,690  $           107,602
Santa Barbara 21  $           680,920  $               3,387  $           135,474
Santa Cruz 18  $           746,500  $               3,713  $           148,522
Central Valley
Fresno 52  $           219,590  $               1,092  $             43,689
Kern (Bakersfield) 55  $           220,270  $               1,096  $             43,824
Kings County 58  $           201,340  $               1,001  $             40,058
Madera 50  $           217,050  $               1,080  $             43,184
Merced 55  $           192,060  $                   955  $             38,212
Placer County 48  $           411,640  $               2,047  $             81,899
Sacramento 48  $           297,620  $               1,480  $             59,214
San Joaquin 47  $           295,000  $               1,467  $             58,692
Stanislaus 50  $           254,440  $               1,266  $             50,623
Tulare 52  $           193,900  $                   964  $             38,578

 

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index

STATE/REGION/COUNTY Q1 2016 Q4 2015   Q1 2015  
CA SFH 34 30 34
CA Condo/Townhomes 41 39 41
Los Angeles Metropolitan Area 35 32 35
Inland Empire 48 45 47
S.F. Bay Area 27 24 27 R
US 60 58 61
S.F. Bay Area
Alameda 23 22 25 R
Contra-Costa 38 37 42 R
Marin 20 17 19
Napa 24 21 29 R
San Francisco 13 11 12
San Mateo 16 14 14
Santa Clara 22 20 22
Solano 47 45 48
Sonoma 26 26 31
Southern California
Los Angeles 31 27 31
Orange County 23 21 22
Riverside County 42 39 42
San Bernardino 57 53 58
San Diego 28 25 28
Ventura 30 26 28
Central Coast
Monterey 27 25 29
San Luis Obispo 26 26 30
Santa Barbara 21 20 R 16 R
Santa Cruz 18 21 22
Central Valley
Fresno 52 49 51
Kern (Bakersfield) 55 55 57
Kings County 58 61 62
Madera 50 48 51
Merced 55 55 60
Placer County 48 44 46
Sacramento 48 46 49
San Joaquin 47 38 39
Stanislaus 50 40 43
Tulare 52 54 57

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