California housing affordability inches up from third quarter, slips from year ago, C.A.R. reports

Nineteen regions see improvement, with Santa Barbara, Contra Costa, Napa, and Los Angeles counties leading the way

News provided by

Feb 12, 2015, 11:00 ET

LOS ANGELES, Feb. 12, 2015 /PRNewswire-USNewswire/ -- California housing affordability improved from third-quarter 2014 but dipped when compared to a year ago, as lower interest rates failed to offset higher home prices, 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 2014 edged up to 31 percent from the 30 percent recorded in the third quarter of 2014 but was down from a revised 32 percent in fourth-quarter 2013, according to C.A.R.'s Traditional Housing Affordability Index (HAI). This is the seventh consecutive quarter that the index was below 40 percent and is near the mid-2008 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 $91,550 to qualify for the purchase of a $452,140 statewide median-priced, existing single-family home in the fourth quarter of 2014. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,290, assuming a 20 percent down payment and an effective composite interest rate of 4.2 percent. The effective composite interest rate in third-quarter 2014 was 4.23 percent and 4.43 percent in the fourth quarter of 2013.

The median home price was $467,280 in third-quarter 2014, and an annual income of $94,880 was needed to purchase a home at that price.

Key points from the fourth-quarter 2014 Housing Affordability report include:

Compared to affordability in third-quarter 2014, 19 regions saw an improvement in housing affordability, three saw declines, and nine were unchanged.
Only San Francisco, Madera, and Merced counties saw a drop in affordability due to price increases from the previous quarter.
Santa Barbara, Contra Costa, Napa, and Los Angeles counties saw the greatest quarter-to-quarter improvement in housing affordability due to price declines.
During the fourth quarter of 2014, the five most affordable counties in California were Kings (64 percent), San Bernardino (57 percent), Tulare (56 percent), Madera (56 percent), Merced (53 percent), and Fresno (53 percent).
San Francisco (14 percent), San Mateo (15 percent), Marin (15 percent), and Santa Cruz (17 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*

CALIFORNIA ASSOCIATION OF REALTORS® Traditional Housing Affordability Index

STATE/REGION/COUNTY	4^th Qtr. 2014	3^rd Qtr. 2014		4^th Qtr. 2013
California Single-family home	31	30		32
California Condo/Townhome	39	39		41
Los Angeles Metropolitan Area	34	32		34
Inland Empire	47	47		49
San Francisco Bay Area	21	21		23
United States	59	57		58

San Francisco Bay Area
Alameda	20	19		23
Contra-Costa (Central County)	23	19		24	r
Marin	15	15		19	r
Napa	24	21		29
San Francisco	14	15		16
San Mateo	15	15		16
Santa Clara	22	21		23
Solano	50	49		56
Sonoma	29	29		30	r
Southern California
Los Angeles	28	25	r	30
Orange County	21	20		20
Riverside County	41	41		43
San Bernardino	57	57		62
San Diego	27	25		28
Ventura	29	27		31
Central Coast
Monterey	27	27		29
San Luis Obispo	26	24		24
Santa Barbara	21	14		18
Santa Cruz	17	17		17
Central Valley
Fresno	53	53		55
Kings County	64	64		63	r
Madera	56	58		67
Merced	53	55		60
Placer County	45	44		47	r
Sacramento	49	48		51
Tulare	56	56		60

r = revised

CALIFORNIA ASSOCIATION OF REALTORS® Traditional Housing Affordability Index

C.A.R. Region	4th Qtr. Housing Affordability Index	4th Qtr.Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Annual Income
California single-family home	31	$ 452,140	$ 2,290	$ 91,550
California Condo/Townhome	39	$ 369,240	$ 1,870	$ 74,770
Los Angeles Metropolitan Area	34	$ 414,040	$ 2,100	$ 83,840
Inland Empire	47	$ 277,730	$ 1,410	$ 56,240
San Francisco Bay Area	21	$ 742,880	$ 3,760	$ 150,420
United States	59	$ 208,700	$ 1,060	$ 42,260

San Francisco Bay Area
Alameda	20	$ 703,370	$ 3,560	$ 142,420
Contra-Costa (Central County)	23	$ 698,300	$ 3,530	$ 141,400
Marin	15	$ 1,009,610	$ 5,110	$ 204,430
Napa	24	$ 581,040	$ 2,940	$ 117,650
San Francisco	14	$ 962,390	$ 4,870	$ 194,870
San Mateo	15	$ 1,050,000	$ 5,320	$ 212,610
Santa Clara	22	$ 855,000	$ 4,330	$ 173,130
Solano	50	$ 327,590	$ 1,660	$ 66,330
Sonoma	29	$ 494,440	$ 2,500	$ 100,120
Southern California
Los Angeles	28	$ 450,880	$ 2,280	$ 91,300
Orange County	21	$ 688,450	$ 3,490	$ 139,400
Riverside County	41	$ 321,610	$ 1,630	$ 65,120
San Bernardino	57	$ 212,310	$ 1,070	$ 42,990
San Diego	27	$ 493,110	$ 2,500	$ 99,850
Ventura	29	$ 569,190	$ 2,880	$ 115,250
Central Coast
Monterey	27	$ 451,550	$ 2,290	$ 91,430
San Luis Obispo	26	$ 468,000	$ 2,370	$ 94,760
Santa Barbara	21	$ 626,370	$ 3,170	$ 126,830
Santa Cruz	17	$ 700,050	$ 3,540	$ 141,750
Central Valley
Fresno	53	$ 201,840	$ 1,020	$ 40,870
Kings County	64	$ 181,050	$ 920	$ 36,660
Madera	56	$ 191,250	$ 970	$ 38,730
Merced	53	$ 182,960	$ 930	$ 37,050
Placer County	45	$ 380,040	$ 1,920	$ 76,950
Sacramento	49	$ 268,660	$ 1,360	$ 54,400
Tulare	56	$ 180,950	$ 920	$ 36,640

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 100 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.

Logo - http://photos.prnewswire.com/prnh/20150202/172996LOGO

SOURCE CALIFORNIA ASSOCIATION OF REALTORS