California housing affordability inches up as seasonal price declines and income growth offset higher interest rates, C.A.R. reports

LOS ANGELES, May 15, 2017 /PRNewswire/ -- Despite a moderate increase in mortgage interest rates, seasonal price declines and higher household income elevated California's housing affordability in first-quarter 2017, 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 first-quarter 2017 inched up to 32 percent, up from 31 percent in the fourth quarter of 2016 but was down from 34 percent in the first quarter a year ago, according to C.A.R.'s Traditional Housing Affordability Index (HAI). This is the 16th 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 fourth 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 $102,050 to qualify for the purchase of a $496,620 statewide median-priced, existing single-family home in the first quarter of 2017. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,550, assuming a 20 percent down payment and an effective composite interest rate of 4.36 percent. The effective composite interest rate in fourth-quarter 2016 was 3.91 percent and 4.01 percent in the first quarter of 2016. 

Homes were less affordable in first-quarter 2017 compared to first-quarter 2016, when the affordability index stood at 34 and the median home price was $465,280. An annual income of $92,570 was needed to make monthly payments of $2,310. 

The affordability of condominiums and townhomes also was flat in first-quarter 2017 compared to the previous quarter. Forty percent of California households earned the minimum income to qualify for the purchase of a $414,940 median-priced condominium or townhome in the first quarter of 2017, and an annual income of $85,270 was required to make monthly payments of $2,130.

Key points from the first-quarter 2017 Housing Affordability report include:

• Compared to affordability in fourth-quarter 2016, eight of 43 counties tracked posted an improvement in housing affordability (Los Angeles, San Diego, Merced, San Joaquin, Tulare, El Dorado, Shasta, and Sutter), 26 experienced a decline (Alameda, Contra Costa, Marin, Napa, Santa Clara, Sonoma, Orange County, Riverside, San Bernardino, Ventura, Monterey, San Luis Obispo, Santa Barbara, Fresno, Kings, Madera, Placer, San Benito, Amador, Humboldt, Lake, Mariposa/Tuolumne, Mendocino, Siskiyou, Tehama, Yuba), and nine were unchanged (San Francisco, San Mateo, Santa Clara, Santa Cruz, Kern, Sacramento, Stanislaus, Butte, and Yolo).
• During the first quarter of 2017, the most affordable counties in California were Tehama, Kern (both at 55 percent); Kings, Sutter (both at 53 percent); and Tulare, San Bernardino (both at 52 percent).
• San Francisco (13 percent), Santa Barbara (14 percent), and San Mateo (15 percent), counties were the least affordable areas in the state.   
• Housing affordability figures are now available for the following counties: Amador, Butte, El Dorado, Humboldt, Lake, Mariposa and Tuolumne (combined), Mendocino, San Benito, Shasta, Siskiyou, Sutter, Tehama, Yolo, and Yuba. See accompanying tables.

Housing Affordability slides (click link to open)

Affordability peak versus current
Annual required income peak vs. current
PITI peak versus current
CA housing affordability by quarter (2006-2017)
Housing affordability by county

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 190,000 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
First quarter 2017

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
First quarter 2017

SOURCE CALIFORNIA ASSOCIATION OF REALTORS

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