Higher interest rates lower California housing affordability in third quarter, C.A.R. reports

- Twenty-nine percent of California households could afford to purchase the $487,420 median-priced home in the third quarter, down from 30 percent in second-quarter 2015 and unchanged from 29 percent in third quarter 2014.

- A minimum annual income of $98,350 was needed to make monthly payments of $2,460, including principal, interest, and taxes on a 30-year, fixed-rate mortgage at 4.16 percent interest rate.

- Thirty-eight percent of home buyers were able to purchase the $390,740 median-priced condo or townhome. An annual income of $78,840 was required to make a monthly payment of $1,970.

Nov 12, 2015, 10:59 ET from CALIFORNIA ASSOCIATION OF REALTORS

LOS ANGELES, Nov. 12, 2015 /PRNewswire-USNewswire/ -- Relatively flat home prices weren't enough to ease housing affordability as higher interest rates reduced the number of Californians who could buy a home in the third quarter, 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 2015 slipped to 29 percent from the 30 percent recorded in the second quarter of 2015 and was flat from the 29 percent in the third quarter a year ago, according to C.A.R.'s Traditional Housing Affordability Index (HAI). 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 $98,350 to qualify for the purchase of a $487,420 statewide median-priced, existing single-family home in the third quarter of 2015.  The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,460, assuming a 20 percent down payment and an effective composite interest rate of 4.16 percent. 

The median home price was $485,910 in second-quarter 2015, and an annual income of $96,140 was needed to purchase a home at that price. The effective composite interest rate in second-quarter 2015 was 3.95 percent. 

Key points from the third-quarter 2015 Housing Affordability report include:

  • Affordability of condominiums and townhomes also slipped in the third quarter, but were more affordable than single-family homes, with 38 percent of home buyers able to purchase the $390,740 median-priced condo or townhome. An annual income of $78,840 was required to make a monthly payment of $1,970.
  • Compared to the previous quarter, housing affordability improved in Marin and Santa Barbara counties, due to a combination of plateauing home prices and continuing wage growth.
  • Compared to the previous year, housing affordability declined in all regions except Marin, San Luis Obispo, Santa Barbara, and Santa Cruz, which improved, and held steady in five regions (Napa, Orange, Monterey, Merced, and Placer).
  • The remaining 19 regions (Alameda, Contra Costa, San Francisco, San Mateo, Santa Clara, Solano, Sonoma, Los Angeles, Riverside, San Bernardino, San Diego, Ventura, Fresno, Kings, Madera, Sacramento, San Joaquin, Stanislaus, and Tulare) saw declines in housing affordability from the previous year.
  • In the Bay Area, Marin posted the only year-to-year improvement in affordability mainly due to flat home prices and growth in annual household income. Other Bay Area counties, such as Santa Clara, Solano, and Sonoma, experienced significant affordability drops as homebuyers looking for more affordable homes moved to outlying counties and drove home prices higher.

 

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

Calif. Single-family (SAAR)

29

$          487,420

$               2,460

$             98,350

Calif. Condo/Townhome

38

$          390,740

$               1,970

$             78,840

Los Angeles Metro Area

31

$          444,470

$               2,240

$             89,690

Inland Empire

45

$          292,480

$               1,480

$             59,020

San Francisco Bay Area

20

$          809,440

$               4,080

$           163,330

United States

56

$          229,000

$               1,160

$             46,210






San Francisco Bay Area





Alameda

20

$          750,460

$               3,790

$          151,430

Contra-Costa (Central Cty.)

19

$          806,680

$               4,070

$          162,770

Marin

19

$       1,063,180

$               5,360

$          214,530

Napa

21

$          646,260

$               3,260

$          130,400

San Francisco

10

$       1,248,790

$               6,300

$          251,980

San Mateo

13

$       1,250,000

$               6,310

$          252,230

Santa Clara

19

$          965,000

$               4,870

$          194,720

Solano

44

$          361,880

$               1,830

$            73,020

Sonoma

24

$          565,790

$               2,850

$          114,170

Southern California





Los Angeles

24

$          506,780

$               2,560

$          102,260

Orange County

20

$          715,250

$               3,610

$          144,320

Riverside County

39

$          335,460

$               1,690

$            67,690

San Bernardino

54

$          230,210

$               1,160

$            46,450

San Diego

24

$          554,370

$               2,800

$          111,860

Ventura

25

$          614,700

$               3,100

$          124,030

Central Coast





Monterey

27

$          480,000

$               2,420

$            96,850

San Luis Obispo

27

$          523,240

$               2,640

$          105,580

Santa Barbara

18

$          686,830

$               3,460

$          138,590

Santa Cruz

19

$          740,000

$               3,730

$          149,320

Central Valley





Fresno

49

$          220,860

$               1,110

$             44,570

Kings County

60

$          194,410

$                  980

$             39,230

Madera

49

$          215,910

$               1,090

$             43,570

Merced

55

$          199,510

$               1,010

$             40,260

Placer County

44

$          395,480

$               2,000

$             79,800

Sacramento

46

$          291,410

$               1,470

$             58,800

San Joaquin

36

$          292,250

$               1,470

$             58,970

Stanislaus

40

$          250,820

$               1,270

$             50,610

Tulare

53

$          189,790

$                  960

$             38,300

 

CALIFORNIA ASSOCIATION OF REALTORS®

Traditional Housing Affordability Index


STATE/REGION/COUNTY

Q3 2015

Q2 2015


Q3 2014


Calif. Single-family (SAAR)

29

30


29

r

Calif. Condo/Townhome

38

39


38

r

Los Angeles Metro Area

31

32


32


Inland Empire

45

46


47


San Francisco Bay Area

20

20


22

r

United States

56

57


57








San Francisco Bay Area






Alameda

20

20

r

21

r

Contra-Costa (Central County)

19

19

r

20

r

Marin

19

17


15


Napa

21

23


21


San Francisco

10

10


12

r

San Mateo

13

13


15


Santa Clara

19

19


21


Solano

44

46


49


Sonoma

24

25


29


Southern California






Los Angeles

24

30


25


Orange County

20

21


20


Riverside County

39

40


41


San Bernardino

54

56


57


San Diego

24

25


25


Ventura

25

25


27


Central Coast






Monterey

27

27


27


San Luis Obispo

27

28


24


Santa Barbara

18

16


14


Santa Cruz

19

20


17


Central Valley






Fresno

49

50


53


Kings County

60

62


64


Madera

49

50


51

r

Merced

55

55


55


Placer County

44

44


44


Sacramento

46

47


48


San Joaquin

36

37


40


Stanislaus

40

41


44


Tulare

53

54


56


r = revised

 

See C.A.R.'s historical housing affordability data.

See first-time buyer housing affordability data.

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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 175,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

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SOURCE CALIFORNIA ASSOCIATION OF REALTORS



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