Highly competitive market depresses California housing affordability in second-quarter 2021, C.A.R. reports
- Twenty-three percent of California households could afford to purchase the $817,950 median-priced home in the second quarter of 2021, down from 27 percent in first-quarter 2021 and 33 percent from second-quarter 2020
- A minimum annual income of $150,800 was needed to make monthly payments of $3,770, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 3.20 percent interest rate
- Thirty-seven percent of home buyers were able to purchase the $585,000 median-priced condo or townhome. An annual income of $108,000 was required to make a monthly payment of $2,700
LOS ANGELES, Aug. 12, 2021 /PRNewswire/ -- A highly competitive market fueled by low interest rates and a tight supply of homes for sale pushed the state's median home price nearly 34 percent higher than a year ago and depressed housing affordability in California in the second quarter of 2021, 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 second-quarter 2021 dropped to 23 percent from 27 percent in the first quarter of 2021 and from 33 percent in the second quarter of 2020, according to C.A.R.'s Traditional Housing Affordability Index (HAI). The second-quarter 2021 figure is less than half of the affordability index 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.
A minimum annual income of $150,800 was needed to qualify for the purchase of a $817,950 statewide median-priced, existing single-family home in the second quarter of 2021. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,770, assuming a 20 percent down payment and an effective composite interest rate of 3.20 percent. The effective composite interest rate was 3.08 percent in first-quarter 2021 and 3.43 percent in second-quarter 2020.
Housing affordability for condominiums and townhomes also declined in second-quarter 2021 compared to a year ago, with 37 percent of California households earning the minimum income to qualify for the purchase of a $585,000 median-priced condominium/townhome, down from 40 percent during the previous quarter and from 44 percent in second-quarter 2020. An annual income of $108,000 was required to make monthly payments of $2,700.
Compared with California, half of the nation's households could afford to purchase a $357,900 median-priced home, which required a minimum annual income of $66,000 to make monthly payments of $1,650. Nationwide affordability also fell from 57 percent a year ago.
Key points from the second-quarter 2021 Housing Affordability report include:
- Compared to the previous quarter, housing affordability declined in 47 tracked counties, improved in three counties (Monterey, Glenn, Mono) and was unchanged in one (Lassen). Compared to the previous year, housing affordability declined in all but one county (San Francisco), which remained unchanged.
- In the San Francisco Bay Area, affordability declined from both the previous quarter and year ago in every county except San Francisco, which held even at 19 percent from a year ago. San Mateo County was the least affordable, with just 17 percent of households able to purchase the $2,117,500 median-priced home. Forty percent of Solano County households could afford the $570,000 median-priced home, making it the most affordable Bay Area county.
- Affordability also fell from both the previous quarter and year ago in every Southern California county with Orange County being the least affordable (17 percent) and San Bernardino County being the most affordable (43 percent).
- In the Central Valley region, Kings County was the most affordable at 56 percent, and San Benito was the least affordable at 25 percent.
- In the Central Coast region, Santa Barbara County was the least affordable at 13 percent and San Luis Obispo County was the most affordable at 21 percent.
- During the second quarter of 2021, Lassen (62 percent) remained the most affordable county in California, followed by Kings (56 percent) and Kern, Tulare, Shasta and Glenn (all at 45 percent). The minimum required qualifying income was less than $66,400 for each of these counties. Lassen also had the lowest minimum qualifying income in the state to purchase a median-priced home at $46,000.
- Mono (9 percent), Santa Barbara (13 percent), and Santa Cruz (15 percent) were the least affordable counties in the state, with each of them requiring a minimum income of at least $176,800 to purchase a median-priced home. San Mateo remained on top of all counties in terms of minimum qualifying income, with the figure reaching $390,400 in the second quarter of 2021. It was one of four counties in California (all in the Bay Area) that required a minimum qualifying income of more than $300,000 in second-quarter 2021.
- Housing affordability declined the most on a year-over-year basis in Santa Barbara and Tehama, with each county dropping 18 and 16 points, respectively from second-quarter 2020 to second-quarter 2021. The plunge in affordability was due primarily to the surge in the counties' median prices from a year ago. Santa Barbara County's median-price increase of 72.5 percent in second-quarter 2021 was the highest increase of all counties in the quarter, and Tehama's 45.9 percent year-over-year increase was the second highest. Mendocino, which had the third largest affordability drop (15 points) from a year ago, had the seventh highest price growth of all counties in the latest quarter.
See C.A.R.'s historical housing affordability data.
See first-time buyer housing affordability data.
Infographic: https://www.car.org/marketing/clients/infographics/Q22021HAI
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®
Traditional Housing Affordability Index
Second quarter 2021
STATE/REGION/COUNTY | 2nd Qtr. 2021 | 1st Qtr. 2021 | 2nd Qtr. 2020 | Median Home Price | Monthly Payment Including Taxes & Insurance | Minimum Qualifying Income | ||
Calif. Single-family homes | 23 | 27 | 33 | $817,950 | $3,770 | $150,800 | ||
Calif. Condo/Townhomes | 37 | 40 | 44 | $585,000 | $2,700 | $108,000 | ||
Los Angeles Metro Area | 24 | 29 | 36 | $730,000 | $3,360 | $134,400 | ||
Inland Empire | 36 | 39 | 46 | $510,000 | $2,350 | $94,000 | ||
San Francisco Bay Area | 19 | 23 | 28 | $1,345,000 | $6,200 | $248,000 | ||
United States | 50 | 54 | 57 | $357,900 | $1,650 | $66,000 | ||
San Francisco Bay Area | ||||||||
Alameda | 18 | 22 | 26 | $1,300,000 | $5,990 | $239,600 | ||
Contra Costa | 26 | 32 | 37 | $1,000,000 | $4,610 | $184,400 | ||
Marin | 21 | 22 | 22 | $1,650,000 | $7,600 | $304,000 | ||
Napa | 23 | 24 | 33 | $905,000 | $4,170 | $166,800 | ||
San Francisco | 19 | 20 | 19 | $1,900,000 | $8,760 | $350,400 | ||
San Mateo | 17 | 19 | 19 | $2,117,500 | $9,760 | $390,400 | ||
Santa Clara | 21 | 22 | 22 | $1,699,500 | $7,830 | $313,200 | ||
Solano | 40 | 44 | 46 | $570,000 | $2,630 | $105,200 | ||
Sonoma | 25 | 27 | 31 | $795,000 | $3,660 | $146,400 | ||
Southern California | ||||||||
Los Angeles | 22 | 24 | r | 31 | r | $756,020 | $3,480 | $139,200 |
Orange | 17 | 20 | 25 | $1,109,500 | $5,110 | $204,400 | ||
Riverside | 33 | 36 | 43 | $560,000 | $2,580 | $103,200 | ||
San Bernardino | 43 | 45 | 54 | $420,000 | $1,940 | $77,600 | ||
San Diego | 22 | 25 | 30 | $850,000 | $3,920 | $156,800 | ||
Ventura | 23 | 27 | 31 | $840,000 | $3,870 | $154,800 | ||
Central Coast | ||||||||
Monterey | 18 | 17 | 25 | $860,000 | $3,960 | $158,400 | ||
San Luis Obispo | 21 | 25 | 31 | $795,000 | $3,660 | $146,400 | ||
Santa Barbara | 13 | 14 | 31 | $1,112,500 | $5,130 | $205,200 | ||
Santa Cruz | 15 | 18 | 23 | $1,250,000 | $5,760 | $230,400 | ||
Central Valley | ||||||||
Fresno | 43 | 46 | 51 | $365,000 | $1,680 | $67,200 | ||
Glenn | 45 | 44 | 46 | $317,500 | $1,460 | $58,400 | ||
Kern | 45 | 47 | 50 | $320,000 | $1,470 | $58,800 | ||
Kings | 56 | 58 | 60 | $305,000 | $1,410 | $56,400 | ||
Madera | 44 | 46 | 51 | $365,000 | $1,680 | $67,200 | ||
Merced | 44 | 46 | 48 | $345,000 | $1,590 | $63,600 | ||
Placer | 35 | 39 | 45 | $655,000 | $3,020 | $120,800 | ||
Sacramento | 38 | 41 | 46 | $505,000 | $2,330 | $93,200 | ||
San Benito | 25 | 31 | 39 | $777,000 | $3,580 | $143,200 | ||
San Joaquin | 37 | 42 | 45 | $500,000 | $2,300 | $92,000 | ||
Stanislaus | 40 | 44 | 49 | $430,000 | $1,980 | $79,200 | ||
Tulare | 45 | 47 | 52 | $320,000 | $1,470 | $58,800 | ||
Far North | ||||||||
Butte | 33 | 37 | 38 | $442,780 | $2,040 | $81,600 | ||
Lassen | 62 | 62 | 68 | $249,900 | $1,150 | $46,000 | ||
Plumas | 39 | 47 | 52 | $402,500 | $1,860 | $74,400 | ||
Shasta | 45 | 48 | 52 | $360,000 | $1,660 | $66,400 | ||
Siskiyou | 44 | 49 | 54 | $298,500 | $1,380 | $55,200 | ||
Tehama | 38 | 46 | 54 | $348,000 | $1,600 | $64,000 | ||
Other Calif. Counties | ||||||||
Amador | 40 | 44 | 53 | $435,000 | $2,000 | $80,000 | ||
Calaveras | 37 | 41 | 49 | $481,590 | $2,220 | $88,800 | ||
Del Norte | 35 | 36 | 43 | $364,250 | $1,680 | $67,200 | ||
El Dorado | 31 | 36 | 44 | $682,000 | $3,140 | $125,600 | ||
Humboldt | 32 | 39 | 43 | $415,000 | $1,910 | $76,400 | ||
Lake | 43 | 46 | 47 | $339,000 | $1,560 | $62,400 | ||
Mariposa | 36 | 37 | 43 | $400,000 | $1,840 | $73,600 | ||
Mendocino | 23 | 27 | 38 | $560,000 | $2,580 | $103,200 | ||
Mono | 9 | 3 | 17 | $960,000 | $4,420 | $176,800 | ||
Nevada | 34 | 37 | 45 | $560,750 | $2,580 | $103,200 | ||
Sutter | 40 | 45 | 50 | $409,000 | $1,890 | $75,600 | ||
Tuolumne | 44 | 49 | 54 | $383,500 | $1,770 | $70,800 | ||
Yolo | 32 | 38 | 43 | $600,000 | $2,770 | $110,800 | ||
Yuba | 39 | 45 | 52 | $405,000 | $1,870 | $74,800 |
SOURCE CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)
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