California housing affordability improves in third-quarter 2021 as mortgage rates remain low and prices begin leveling off, C.A.R. reports

- Twenty-four percent of California households could afford to purchase the $814,580 median-priced home in the third quarter of 2021, up from 23 percent in second-quarter 2021 but down from 28 percent in third-quarter 2020.

- A minimum annual income of $148,400 was needed to make monthly payments of $3,710, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 3.07 percent interest rate.

- Thirty-seven percent of home buyers were able to purchase the $600,000 median-priced condo or townhome. A minimum annual income of $109,200 was required to make a monthly payment of $2,730.

News provided by

CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)

Nov 10, 2021, 11:18 ET

LOS ANGELES, Nov. 10, 2021 /PRNewswire/ -- A slightly less competitive housing market combined with modest household income growth allowed more Californians to purchase a median-priced home in the third quarter of 2021, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

Infographic: https://www.car.org/Global/Infographics/HAI-2021-Q3

California housing affordability improves in third-quarter 2021 as mortgage rates remain low and prices begin leveling off.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in third-quarter 2021 edged up to 24 percent from 23 percent in the second quarter of 2021 but was down from 28 percent in the third quarter of 2020, according to C.A.R.'s Traditional Housing Affordability Index (HAI). The third-quarter 2021 figure is less than half of the affordability index 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.

A minimum annual income of $148,400 was needed to qualify for the purchase of a $814,580 statewide median-priced, existing single-family home in the third quarter of 2021. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,710, assuming a 20 percent down payment and an effective composite interest rate of 3.07 percent. The effective composite interest rate was 3.20 percent in second-quarter 2021 and 3.15 percent in third-quarter 2020.

Despite setting a record high median price in third-quarter 2021, affordability for condominiums and townhomes was unchanged from the previous quarter. Thirty-seven percent of California households earned the minimum income to qualify for the purchase of a $600,000 median-priced condo/townhome in the third quarter of 2021, which required an annual income of $109,200 to make monthly payments of $2,730. The third quarter 2021 figure was down from 42 percent a year ago.

Compared with California, half of the nation's households could afford to purchase a $363,700 median-priced home, which required a minimum annual income of $66,400 to make monthly payments of $1,660. Nationwide affordability was down from 55 percent a year ago.

Key points from the third-quarter 2021 Housing Affordability report include:

Compared to the previous quarter, housing affordability declined in 10 tracked counties, improved in 30 counties, and remained unchanged in 11. Compared to the previous year, 41 counties experienced a drop in housing affordability from a year ago, seven counties remained unchanged, and only three counties improved (San Francisco, Monterey, Lassen).
In the San Francisco Bay Area, affordability improved from the previous quarter in every county, except Napa, which held even at 23 percent. Alameda and San Mateo counties were the least affordable, tied at just 19 percent of households able to purchase the $2 million and $1.3 million median-priced home, respectively. Forty-two percent of Solano County households could afford the $580,000 median-priced home, making it the most affordable Bay Area county.
In the Southern California region, affordability improved from the previous quarter in four counties (Los Angeles, Orange, San Diego, and Ventura) and was unchanged in Riverside (33 percent), and San Bernardino, which was the most affordable (43 percent).
In the Central Valley region, Kings County was the most affordable at 56 percent, and San Benito was the least affordable at 27 percent.
In the Central Coast region, Santa Barbara and Santa Cruz counties were tied for the least affordable, and San Luis Obispo County was the most affordable at 24 percent.
During the third quarter of 2021, Lassen (68 percent) remained the most affordable county in California in the third quarter of 2021, followed by Kings (56 percent) and Tulare (46 percent). The minimum qualifying income was less than $58,800 for each of these counties. Lassen also had the lowest minimum qualifying income to purchase a median-priced home at $39,200.
Mono (13 percent), Santa Barbara (17 percent) and Santa Cruz (17 percent) were the least affordable counties in the state, with each of them requiring at least a minimum income of $153,200 to purchase a median-priced home in those counties. Purchasing a median-priced home in San Mateo required the highest minimum annual income, reaching $364,000 in the third quarter of 2021.
Three additional Bay Area counties required minimum annual incomes of over $300,000 in third-quarter 2021, including San Francisco ($331,600), Marin ($305,200), and Santa Clara ($300,400).
Housing affordability declined the most on a year-over-year basis in Yuba and Tehama, dropping 13 points and 10 points, respectively. The plunge in affordability was due primarily to the surge in the counties' median prices from a year ago, relative to the moderate rise in household income. Yuba County's median price increased 20.9 percent in third-quarter 2021, and Tehama's grew 25.7 percent year-over-year. Calaveras County had the largest median price growth (29.1 percent) but the fourth largest drop in affordability (8 points) from a year ago.

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
Third quarter 2021

STATE/REGION/COUNTY	3^rd Qtr. 2021	^2nd Qtr. 2021	3^rd Qtr. 2020	Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
Calif. Single-family home	24	23	28	$814,580	$3,710	$148,400
Calif. Condo/Townhome	37	37	42	$600,000	$2,730	$109,200
Los Angeles Metro Area	26	24	31	$730,000	$3,320	$132,800
Inland Empire	36	36	42	$524,000	$2,390	$95,600
San Francisco Bay Area	22	19	26	$1,292,250	$5,880	$235,200
United States	50	50	55	$363,700	$1,660	$66,400

San Francisco Bay Area
Alameda	19	18	24	$1,300,000	$5,920	$236,800
Contra Costa	31	26	34	$905,000	$4,120	$164,800
Marin	22	21	22	$1,675,000	$7,630	$305,200
Napa	23	23	27	$930,000	$4,230	$169,200
San Francisco	21	19	20	$1,820,000	$8,290	$331,600
San Mateo	19	17	19	$2,000,000	$9,110	$364,400
Santa Clara	22	21	22	$1,650,000	$7,510	$300,400
Solano	42	40	45	$580,000	$2,640	$105,600
Sonoma	28	25	29	$765,000	$3,480	$139,200
Southern California
Los Angeles	19	22	23	$860,870	$3,920	$156,800
Orange	18	17	23	$1,100,000	$5,010	$200,400
Riverside	33	33	40	$570,000	$2,600	$104,000
San Bernardino	43	43	51	$437,500	$1,990	$79,600
San Diego	23	22	27	$850,000	$3,870	$154,800
Ventura	25	23	28	$830,000	$3,780	$151,200
Central Coast
Monterey	20	18	19	$827,250	$3,770	$150,800
San Luis Obispo	24	21	28	$772,500	$3,520	$140,800
Santa Barbara	17	13	17	$1,015,000	$4,620	$184,800
Santa Cruz	17	15	19	$1,201,000	$5,470	$218,800
Central Valley
Fresno	42	43	48	$375,000	$1,710	$68,400
Glenn	44	45	49	$325,000	$1,480	$59,200
Kern	45	45	49	$332,000	$1,510	$60,400
Kings	56	56	59	$315,000	$1,430	$57,200
Madera	43	44	49	$378,000	$1,720	$68,800
Merced	44	44	44	$365,000	$1,660	$66,400
Placer	38	35	43	$650,000	$2,960	$118,400
Sacramento	39	38	44	$511,950	$2,330	$93,200
San Benito	27	25	32	$778,500	$3,540	$141,600
San Joaquin	37	37	44	$512,000	$2,330	$93,200
Stanislaus	41	40	47	$435,000	$1,980	$79,200
Tulare	46	45	50	$322,000	$1,470	$58,800
Far North
Butte	35	33	35	$441,750	$2,010	$80,400
Lassen	68	62	63	$215,000	$980	$39,200
Plumas	38	39	39	$423,000	$1,930	$77,200
Shasta	44	45	50	$375,000	$1,710	$68,400
Siskiyou	41	44	49	$331,500	$1,510	$60,400
Tehama	38	38	48	$349,000	$1,590	$63,600
Other Calif. Counties
Amador	42	40	50	$425,000	$1,940	$77,600
Calaveras	39	37	47	$475,000	$2,160	$86,400
Del Norte	35	35	39	$382,500	$1,740	$69,600
El Dorado	35	31	40	$660,000	$3,010	$120,400
Humboldt	32	32	41	$420,000	$1,910	$76,400
Lake	42	43	47	$352,000	$1,600	$64,000
Mariposa	35	36	35	$422,650	$1,920	$76,800
Mendocino	23	23	31	$554,000	$2,520	$100,800
Mono	13	9	16	$841,000	$3,830	$153,200
Nevada	35	34	41	$561,000	$2,550	$102,000
Sutter	42	40	47	$405,000	$1,840	$73,600
Tuolumne	45	44	52	$389,500	$1,770	$70,800
Yolo	33	32	38	$600,000	$2,730	$109,200
Yuba	38	39	51	$411,000	$1,870	$74,800