Higher home prices driven by dearth of inventory depresses California housing affordability in third-quarter 2020, C.A.R. reports
- Twenty-eight percent of California households could afford to purchase the $693,680 median-priced home in the third quarter of 2020, down from 33 percent in second-quarter 2020 and down from 31 percent a year ago.
- A minimum annual income of $127,200 was needed to make monthly payments of $3,180, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 3.15 percent interest rate.
- Forty-two percent of home buyers were able to purchase the $512,000 median-priced condo or townhome. An annual income of $94,000 was required to make a monthly payment of $2,350.
LOS ANGELES, Nov. 12, 2020 /PRNewswire/ -- Double-digit home price increases fueled by a shortage of homes for sale pushed California's third quarter housing affordability to its lowest level in nearly two years, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) https://www.car.org/ said today.
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in third-quarter 2020 fell to 28 percent from 33 percent in the second quarter of 2020 and was down from 31 percent in the third quarter a year ago, according to C.A.R.'s Traditional Housing Affordability Index. The third-quarter 2020 figure was the lowest since the fourth quarter of 2018. California's housing affordability index hit a peak of 56 percent in the third quarter of 2012.
C.A.R.'s Housing Affordability Index (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 $127,200 was needed to qualify for the purchase of a $693,680 statewide median-priced, existing single-family home in the third quarter of 2020. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,180, assuming a 20 percent down payment and an effective composite interest rate of 3.15 percent. The effective composite interest rate was 3.43 percent in second-quarter 2020 and 3.85 percent in third-quarter 2019.
Housing affordability for condominiums and townhomes also dropped from second-quarter 2020, with two in five (42 percent) California households earning the minimum income to qualify for the purchase of a $512,000 median-priced condominium/townhome. An annual income of $94,000 was required to make monthly payments of $2,350. Forty-three percent of households could afford to buy a median-priced condominium/townhome a year ago.
Compared with California, more than half of the nation's households (55 percent) could afford to purchase a $313,500 median-priced home, which required a minimum annual income of $57,600 to make monthly payments of $1,440.
Multimedia/Historical data:
- Infographic: https://www.car.org/marketing/clients/infographics
- Slide deck: https://car.sharefile.com/d-sa79b478823a4c2e8
- Historical traditional housing affordability data: http://www.car.org/marketdata/data/haitraditional/
- Historical first-time buyer housing affordability data: http://www.car.org/marketdata/data/ftbhai/
Key points from the third-quarter 2020 Housing Affordability report include:
- The statewide median home price in third-quarter 2020 increased 13.6 percent from the previous quarter and jumped 13.8 percent from third-quarter 2019.
- All major regions of the state experienced a decrease in affordability from both the previous quarter and year.
- When compared to a year ago, housing affordability declined in 31 of 51 tracked counties and improved in 11.
- In the San Francisco Bay Area, affordability improved from third-quarter 2019 only in San Francisco and Sonoma counties and held steady in two (Marin, Santa Clara). Affordability declined in the remaining counties (Alameda, Contra Costa, Napa, San Mateo, and Solano). A 2.6 percent decline in San Francisco County's median home price during third-quarter 2020 and lower interest rates contributed to the improvement in affordability from both the previous quarter and year.
- In Southern California, affordability fell from a year ago in all counties with the exception of San Bernardino, which remained flat. Los Angeles and Orange counties were the least affordable in the region (both at 23 percent) and San Bernardino County was the most affordable (51 percent).
- In the Central Valley region, affordability improved from third-quarter 2019 only in Kings County and was flat in San Joaquin. San Benito County (32 percent) was the least affordable and Kings County (59 percent) was the most affordable.
- In the Central Coast region, only San Luis Obispo County recorded an improvement in housing affordability from a year ago. San Luis Obispo (28 percent) was also the most affordable county in the region while Santa Barbara (17 percent) was the least affordable.
- In the Far North region, affordability improved from a year ago in Shasta and Tehama counties while Plumas recorded the largest drop from 46 percent in third-quarter 2019 to 39 percent in third-quarter 2020.
- In the third quarter of 2020, the most affordable counties in the state were Lassen (63 percent), Kings (59 percent), and Tuolumne (52 percent). The minimum qualifying income was $59,600 or less for each of these counties.
- Mono (16 percent), Santa Barbara (17 percent), Monterey, San Mateo and Santa Cruz (all at 19 percent) were the least affordable counties in the state. San Mateo and San Francisco counties required an annual minimum qualifying income of over $305,000 to purchase a median-priced home in third-quarter 2020; San Mateo required the highest income of all counties in California at $324,000.
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® | ||||||||
STATE/REGION/COUNTY | 3rd Qtr. 2020 | 2nd Qtr. 2020 | 3rd Qtr. | Median Home | Monthly | Minimum | ||
Calif. Single-family home | 28 | 33 | 31 | $693,680 | $3,180 | $127,200 | ||
Calif. Condo/Townhome | 42 | 44 | 43 | $512,000 | $2,350 | $94,000 | ||
Los Angeles Metro Area | 31 | 36 | 33 | $610,000 | $2,800 | $112,000 | ||
Inland Empire | 42 | 46 | 44 | $435,000 | $2,000 | $80,000 | ||
San Francisco Bay Area | 26 | 28 | 29 | $1,057,500 | $4,850 | $194,000 | ||
United States | 55 | 57 | 56 | $313,500 | $1,440 | $57,600 | ||
San Francisco Bay Area | ||||||||
Alameda | 24 | 26 | 26 | $1,034,500 | $4,750 | $190,000 | ||
Contra Costa | 34 | 37 | 39 | $790,000 | $3,620 | $144,800 | ||
Marin | 22 | 22 | 22 | $1,540,000 | $7,060 | $282,400 | ||
Napa | 27 | 33 | 29 | $825,000 | $3,780 | $151,200 | ||
San Francisco | 20 | 19 | 18 | $1,665,000 | $7,640 | $305,600 | ||
San Mateo | 19 | 19 | 20 | $1,765,000 | $8,100 | $324,000 | ||
Santa Clara | 22 | 22 | 22 | $1,400,000 | $6,420 | $256,800 | ||
Solano | 45 | 46 | 47 | $500,000 | $2,290 | $91,600 | ||
Sonoma | 29 | 31 | 28 | $715,000 | $3,280 | $131,200 | ||
Southern California | ||||||||
Los Angeles | 23 | 32 | 25 | $708,870 | $3,250 | $130,000 | ||
Orange | 23 | 25 | 25 | $910,000 | $4,170 | $166,800 | ||
Riverside | 40 | 43 | 41 | $475,000 | $2,180 | $87,200 | ||
San Bernardino | 51 | 54 | 51 | $350,500 | $1,610 | $64,400 | ||
San Diego | 27 | 30 | 29 | $729,000 | $3,340 | $133,600 | ||
Ventura | 28 | 31 | 30 | $750,000 | $3,440 | $137,600 | ||
Central Coast | ||||||||
Monterey | 19 | 25 | 24 | $800,000 | $3,670 | $146,800 | ||
San Luis Obispo | 28 | 31 | 27 | $668,420 | $3,070 | $122,800 | ||
Santa Barbara | 17 | 31 | 22 | $975,500 | $4,480 | $179,200 | ||
Santa Cruz | 19 | 23 | 22 | $1,050,000 | $4,820 | $192,800 | ||
Central Valley | ||||||||
Fresno | 48 | 51 | 49 | $322,000 | $1,480 | $59,200 | ||
Glenn | 49 | 46 | NA | $284,500 | $1,310 | $52,400 | ||
Kern | 49 | 50 | 51 | $287,000 | $1,320 | $52,800 | ||
Kings | 59 | 60 | 55 | $267,500 | $1,230 | $49,200 | ||
Madera | 49 | 51 | 52 | $321,950 | $1,480 | $59,200 | ||
Merced | 44 | 48 | 49 | $320,340 | $1,470 | $58,800 | ||
Placer | 43 | 45 | 48 | $539,000 | $2,470 | $98,800 | ||
Sacramento | 44 | 46 | 45 | $429,900 | $1,970 | $78,800 | ||
San Benito | 32 | 39 | 35 | $665,000 | $3,050 | $122,000 | ||
San Joaquin | 44 | 45 | 44 | $423,000 | $1,940 | $77,600 | ||
Stanislaus | 47 | 49 | 48 | $370,000 | $1,700 | $68,000 | ||
Tulare | 50 | 52 | 51 | $275,000 | $1,260 | $50,400 | ||
Far North | ||||||||
Butte | 35 | 38 | 38 | $402,800 | $1,850 | $74,000 | ||
Lassen | 63 | 68 | 64 | $239,000 | $1,100 | $44,000 | ||
Plumas | 39 | 52 | 46 | $389,500 | $1,790 | $71,600 | ||
Shasta | 50 | 52 | 47 | $315,000 | $1,450 | $58,000 | ||
Siskiyou | 49 | 54 | 51 | $260,000 | $1,190 | $47,600 | ||
Tehama | 48 | 54 | 46 | $277,750 | $1,270 | $50,800 | ||
Other Calif. Counties | ||||||||
Amador | 50 | 53 | 49 | $355,000 | $1,630 | $65,200 | ||
Calaveras | 47 | 49 | 49 | $368,000 | $1,690 | $67,600 | ||
Del Norte | 39 | 43 | NA | $314,000 | $1,440 | $57,600 | ||
El Dorado | 40 | 44 | 42 | $570,000 | $2,610 | $104,400 | ||
Humboldt | 41 | 43 | 37 | $345,000 | $1,580 | $63,200 | ||
Lake | 47 | 47 | 47 | $309,000 | $1,420 | $56,800 | ||
Mariposa | 35 | 43 | 44 | $415,000 | $1,900 | $76,000 | ||
Mendocino | 31 | 38 | 30 | $493,000 | $2,260 | $90,400 | ||
Mono | 16 | 17 | 17 | $736,500 | $3,380 | $135,200 | ||
Nevada | 41 | 45 | 41 | $479,000 | $2,200 | $88,000 | ||
Sutter | 47 | 50 | 47 | $349,900 | $1,610 | $64,400 | ||
Tuolumne | 52 | 54 | 49 | $325,000 | $1,490 | $59,600 | ||
Yolo | 38 | 43 | 39 | $523,360 | $2,400 | $96,000 | ||
Yuba | 51 | 52 | 48 | $340,000 | $1,560 | $62,400 | ||
NA = not available
SOURCE CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)
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