Growth in spring home prices leads to sizable drop in California housing affordability, C.A.R. reports

Every region except Kings County posts lower affordability compared to previous quarter.

- Thirty percent of California households could afford to purchase the $485,100 median-priced home in the second quarter, down from 34 percent in first-quarter 2015 and unchanged from 30 percent in second quarter 2014.

- A minimum annual income of $95,980 was needed to make monthly payments of $2,400, including principal, interest, and taxes on a 30-year fixed-rate mortgage at 3.95 percent interest rate.

- Thirty-nine percent of home buyers were able to purchase the $388,250 median-priced condo or townhome. An annual income of $76,820 was required to make a monthly payment of $1,920.

Aug 11, 2015, 13:23 ET from CALIFORNIA ASSOCIATION OF REALTORS

LOS ANGELES, Aug. 11, 2015 /PRNewswire-USNewswire/ -- A sharp increase in spring housing demand elevated home prices to levels last seen in late 2007 and reduced California's housing affordability considerably in the second quarter, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. The second-quarter 2015 drop in housing affordability follows two straight quarters of improvements for the state.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in second-quarter 2015 fell to 30 percent from the 34 percent recorded in the first quarter of 2015 and flat from the 30 percent in the second 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 second 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 $95,980 to qualify for the purchase of a $485,100 statewide median-priced, existing single-family home in the second quarter of 2015.  The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,400, assuming a 20 percent down payment and an effective composite interest rate of 3.95 percent. 

The median home price was $441,610 in first-quarter 2015, and an annual income of $87,540 was needed to purchase a home at that price. The effective composite interest rate in second-quarter 2015 was 3.97 percent. 

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

  • Condominiums and townhomes were more affordable than single-family homes, with 39 percent of home buyers able to purchase the $388,250 median-priced condo or townhome. An annual income of $76,820 was required to make a monthly payment of $1,920.
  • Compared to the previous quarter, housing affordability declined in every region except Kings County, which held steady, primarily driven by growth in spring home prices.
  • Compared to the previous year, housing affordability improved in five regions (Marin, Orange, Monterey, San Luis Obispo, and Santa Cruz) and held steady in four regions (Alameda, Santa Clara, Los Angeles, and Placer).
  • The remaining 19 regions (Contra Costa, Napa, San Francisco, San Mateo, Solano, Sonoma, Riverside, San Bernardino, San Diego, Ventura, Santa Barbara, Fresno, Kings, Madera, Merced, Sacramento, San Joaquin, Stanislaus, and Tulare) saw declines in housing affordability from the previous year.
  • In the Bay Area, Marin, San Luis Obispo, and Santa Cruz counties posted the largest year-to-year improvement in affordability mainly due to growth in annual household income and lower interest rates. San Luis Obispo and Santa Cruz, in particular, experienced a large increase in incomes relative to price changes. Tech workers may have migrated to Santa Cruz due to its affordability and relative proximity to San Jose and Bay Area.

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

C.A.R. Region

Housing

Affordability Index

Median Home

Price

Monthly Payment Including Taxes & Insurance

Minimum

Qualifying Income

Calif. Single-family (SAAR)

30

$           485,100

$               2,400

$             95,980

Calif. Condo/Townhome

39

$           388,250

$               1,920

$             76,820

Los Angeles Metro Area

32

$           440,620

$               2,180

$             87,180

Inland Empire

46

$           291,730

$               1,440

$             57,720

San Francisco Bay Area

20

$           841,560

$               4,160

$           166,500

United States

57

$           229,400

$               1,140

$             45,390






San Francisco Bay Area





Alameda

18

$           812,810

$               4,020

$           160,820

Contra-Costa (Central Cty.)

18

$           836,020

$               4,140

$           165,410

Marin

17

$       1,169,900

$               5,790

$           231,470

Napa

23

$           623,970

$               3,090

$           123,450

San Francisco

10

$       1,353,450

$               6,690

$           267,780

San Mateo

13

$       1,300,000

$               6,430

$           257,210

Santa Clara

19

$           980,000

$               4,850

$           193,890

Solano

46

$           352,850

$               1,750

$             69,810

Sonoma

25

$           566,980

$               2,800

$           112,180

Southern California





Los Angeles

30

$           445,190

$               2,200

$             88,080

Orange County

21

$           713,220

$               3,530

$           141,110

Riverside County

40

$           334,580

$               1,650

$             66,200

San Bernardino

56

$           223,830

$               1,110

$             44,290

San Diego

25

$           547,840

$               2,710

$           108,390

Ventura

25

$           619,060

$               3,060

$           122,480

Central Coast





Monterey

27

$           480,000

$               2,370

$             94,970

San Luis Obispo

28

$           518,550

$               2,560

$           102,600

Santa Barbara

16

$           741,570

$               3,670

$           146,720

Santa Cruz

20

$           727,250

$               3,600

$           143,890

Central Valley





Fresno

50

$           219,030

$               1,080

$             43,340

Kings County

62

$           186,330

$                   920

$             36,870

Madera

50

$           216,430

$               1,070

$             42,820

Merced

55

$           205,060

$               1,010

$             40,570

Placer County

44

$           399,680

$               1,980

$             79,080

Sacramento

47

$           291,030

$               1,440

$             57,580

San Joaquin

37

$           285,810

$               1,410

$             56,550

Stanislaus

41

$           246,480

$               1,220

$             48,770

Tulare

54

$           190,740

$                   940

$             37,740

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index

STATE/REGION/COUNTY

Q2 2015

Q1 2015


Q2 2014


Calif. Single-family home

30

34


30


Calif. Condo/Townhome

39

41


38


Los Angeles Metro Area

32

35


33


Inland Empire

46

47


47


San Francisco Bay Area

20

23


20


United States

57

61


57








San Francisco Bay Area






Alameda

18

23


18


Contra-Costa (Central County)

18

21


19


Marin

17

19


14


Napa

23

34


25


San Francisco

10

12


13


San Mateo

13

14


14


Santa Clara

19

22


19


Solano

46

48


50


Sonoma

25

31


29


Southern California






Los Angeles

30

31


30


Orange County

21

22


20


Riverside County

40

42


41


San Bernardino

56

58


58


San Diego

25

28


26


Ventura

25

28


28


Central Coast






Monterey

27

29


26


San Luis Obispo

28

30


23


Santa Barbara

16

18


18


Santa Cruz

20

22


18


Central Valley






Fresno

50

51


53


Kings County

62

62


64


Madera

50

51


55

r

Merced

55

60


57


Placer County

44

46


44


Sacramento

47

49


48


San Joaquin

37

39


40


Stanislaus

41

43


45


Tulare

54

57


56


r = revised

See C.A.R.'s historical housing affordability data.
See second-time buyer housing affordability data.

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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.

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SOURCE CALIFORNIA ASSOCIATION OF REALTORS



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