Flat home prices, stable interest rates lift California housing affordability, C.A.R. reports

- Twenty-seven percent of California households could afford to purchase the $588,530 median-priced home in the third quarter of 2018, up from 26 percent in second-quarter 2018 and down from 28 percent a year ago.

- A minimum annual income of $125,540 was needed to make monthly payments of $3,140, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.77 percent interest rate.

- Thirty-five percent of home buyers were able to purchase the $479,390 median-priced condo or townhome. An annual income of $102,260 was required to make a monthly payment of $2,560.

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CALIFORNIA ASSOCIATION OF REALTORS

Nov 01, 2018, 10:58 ET

LOS ANGELES, Nov. 1, 2018 /PRNewswire/ -- More Californians could afford to purchase a home in the third quarter as flat home prices and stable interest rates combined to improve California housing affordability, 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 2018 edged up to 27 percent from 26 percent in the second quarter of 2018 and was down from 28 percent in the third quarter a year ago, according to C.A.R.'s Traditional Housing Affordability Index (HAI). The index has been below 30 percent for five of the past eight quarters. 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.

A minimum annual income of $125,540 was needed to qualify for the purchase of a $588,530 statewide median-priced, existing single-family home in the third quarter of 2018. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,140, assuming a 20 percent down payment and an effective composite interest rate of 4.77 percent. The effective composite interest rate in second-quarter 2018 was 4.7 percent and 4.16 percent in the third quarter of 2017.

Conversely, housing affordability for condominiums and townhomes fell in third-quarter 2018 compared to the previous quarter with 35 percent of California households earning the minimum income to qualify for the purchase of a $479,390 median-priced condominium/townhome, down from 36 percent in the second quarter. An annual income of $102,260 was required to make monthly payments of $2,560.

Compared with California, more than half of the nation's households (53 percent) could afford to purchase a $266,900 median-priced home, which required a minimum annual income of $56,930 to make monthly payments of $1,420.

Key points from the third-quarter 2018 Housing Affordability report include:

Housing affordability improved from third-quarter 2017 in 10 tracked counties and declined in 33 counties. Affordability in five counties remained flat.
In the San Francisco Bay Area, affordability improved from a year ago in San Francisco and Marin counties, primarily due to higher wages. Affordability fell in six counties (Alameda, Contra Costa, Napa, San Mateo, Solano, and Sonoma). Affordability held steady in Santa Clara County.
In Southern California, affordability improved only in Ventura, and dropped in four counties (Orange, Riverside, San Bernardino, and San Diego) compared to a year ago. Affordability in Los Angeles County was unchanged.
In the Central Valley, Fresno and Madera counties saw an improvement in affordability from third-quarter 2017. Housing affordability decreased from a year ago in eight counties (Kings, Merced, Placer, Sacramento, San Benito, San Joaquin, Stanislaus and Tulare). Affordability held steady only in Kern County.
In the Central Coast region, only Santa Barbara experienced a year-to-year improvement in affordability, while three counties (Monterey, San Luis Obispo, and Santa Cruz) posted a decline.
During the third quarter of 2018, the most affordable counties in California were Lassen (67 percent), Kern and Kings (51 percent), Tehama (49 percent) and Yuba (48 percent).
Mono (11 percent), Santa Cruz (12 percent), San Mateo (14 percent), San Francisco (15 percent), and Santa Clara (17 percent) counties were the least affordable areas in the state.

Housing Affordability slides (click link to open)

Affordability peak versus current
Annual required income peak vs. current
Monthly PITI peak versus current
Affordability by region peak versus current
Housing affordability by county

See C.A.R.'s historical housing affordability data.
See second-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 than190,000 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 2018

STATE/REGION/COUNTY	3^rdQtr 2018	2^nd Qtr 2018		3^rd Qtr 2017	Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
Calif. Single-family home	27	26		28	$588,530	$3,140	$125,540
Calif. Condo/Townhome	35	36		38	$479,390	$2,560	$102,260
Los Angeles Metro Area	30	29		30	$526,000	$2,810	$112,200
Inland Empire	41	41		43	$362,500	$1,930	$77,330
San Francisco Bay Area	21	18		23	$950,000	$5,070	$202,650
United States	53	53		55	$266,900	$1,420	$56,930

San Francisco Bay Area
Alameda	18	16		20	$950,000	$5,070	$202,650
Contra Costa	32	29		33	$660,000	$3,520	$140,790
Marin	19	18		18	$1,300,000	$6,930	$277,310
Napa	24	25		26	$729,500	$3,890	$155,610
San Francisco	15	14		13	$1,600,000	$8,530	$341,300
San Mateo	14	14		15	$1,600,000	$8,530	$341,300
Santa Clara	17	16		17	$1,300,000	$6,930	$277,310
Solano	38	38		43	$455,000	$2,430	$97,060
Sonoma	22	20		25	$660,000	$3,520	$140,790
Southern California
Los Angeles	22	26		22	$628,940	$3,350	$134,160
Orange	20	20		21	$830,000	$4,430	$177,050
Riverside	37	37		38	$405,000	$2,160	$86,390
San Bernardino	48	49		51	$294,900	$1,570	$62,910
San Diego	23	23		26	$650,000	$3,470	$138,650
Ventura	28	28		27	$665,000	$3,550	$141,850
Central Coast
Monterey	20	19		22	$622,000	$3,320	$132,680
San Luis Obispo	21	22		23	$640,000	$3,410	$136,520
Santa Barbara	26	20		20	$599,500	$3,200	$127,880
Santa Cruz	12	12		17	$903,000	$4,820	$192,620
Central Valley
Fresno	46	46	r	45	$275,060	$1,470	$58,670
Kern	53	53		53	$246,000	$1,310	$52,480
Kings	51	50		52	$230,000	$1,230	$49,060
Madera	48	48	r	44	$260,000	$1,390	$55,460
Merced	40	42		47	$276,320	$1,470	$58,940
Placer	42	41		44	$480,000	$2,560	$102,390
Sacramento	42	41		43	$370,000	$1,970	$78,930
San Benito	27	30		31	$610,000	$3,250	$130,120
San Joaquin	38	38		41	$370,000	$1,970	$78,930
Stanislaus	45	45		46	$319,900	$1,710	$68,240
Tulare	47	48		51	$239,900	$1,280	$51,170
Other Calif. Counties
Amador	NA	44		44	NA	NA	NA
Butte	39	38		40	$315,000	$1,680	$67,190
Calaveras	43	43		44	$332,950	$1,780	$71,020
El Dorado	41	38		41	$489,500	$2,610	$104,420
Humboldt	33	33		33	$315,000	$1,680	$67,190
Lake County	39	37		38	$266,250	$1,420	$56,790
Lassen	67	64		64	$175,000	$930	$37,330
Mariposa	40	39		51	$315,000	$1,680	$67,190
Mendocino	23	22		28	$420,000	$2,240	$89,590
Mono	11	14		20	$675,000	$3,600	$143,990
Nevada	32	32		39	$429,500	$2,290	$91,620
Plumas	44	42		47	$282,000	$1,500	$60,150
Shasta	44	46		48	$275,000	$1,470	$58,660
Siskiyou	47	48		49	$214,200	$1,140	$45,690
Sutter	45	45		51	$298,500	$1,590	$63,670
Tehama	49	51		56	$223,950	$1,190	$47,770
Tuolumne	41	43		45	$318,000	$1,700	$67,830
Yolo	35	33		34	$450,000	$2,400	$95,990
Yuba	48	45		43	$270,000	$1,440	$57,590