Lower interest rates and steady home prices ease California housing affordability for second straight quarter, C.A.R. reports

Seventeen regions see improvement from previous quarter, with Napa, Merced, Marin, San Luis Obispo, Los Angeles, and Alameda counties leading the way

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CALIFORNIA ASSOCIATION OF REALTORS

May 12, 2015, 01:50 ET

LOS ANGELES, May 12, 2015 /PRNewswire-USNewswire/ -- Lower interest rates and stabilizing home prices over the past year combined to make it easier for more Californians to purchase a home in the first quarter of 2015, 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 first-quarter 2015 rose to 34 percent from the 31 percent recorded in the fourth quarter of 2014 and up from 33 percent in the first quarter a year ago, according to C.A.R.'s Traditional Housing Affordability Index (HAI). This is the second consecutive quarter of improvements for the state and the highest level since second-quarter 2013. 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 $87,700 to qualify for the purchase of a $442,430 statewide median-priced, existing single-family home in the first quarter of 2015. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,190, assuming a 20 percent down payment and an effective composite interest rate of 3.97 percent.

The median home price was $418,570 in first-quarter 2014, and an annual income of $86,800 was needed to purchase a home at that price. The effective composite interest rate in first-quarter 2014 was 4.46 percent.

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

The affordability picture was promising when comparing quarterly changes. Seventeen regions had improvements, nine had declines, and two were unchanged. Compared to first-quarter 2014, 11 regions had improvements, 12 had declines, and six held steady.
Marin, San Luis Obispo, and Monterey counties saw the largest year-to-year improvements in affordability, mainly due to increases in median annual household income and interest rate declines.
Contra Costa, Solano, and San Joaquin counties experienced the largest year-to-year declines in affordability, resulting from double-digit home price growth.
Affordability in Santa Clara and Sacramento counties held steady from the previous quarter, primarily due to moderate home price growth, which was offset by interest rate declines.
Marin, Napa, and Santa Cruz counties had the largest quarter-to-quarter improvements in affordability, mainly due to increases in the median annual household income, and declines in the interest rate and prices.
Contra Costa, Santa Barbara, and San Mateo counties posted the largest quarter-to-quarter declines in affordability as the result of strong home price gains.

Housing Affordability slides (click link to open)
Affordability peak versus current
Annual income peak versus current
PITI peak versus current

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

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 home	34	$ 442,430	$ 2,190	$ 87,700
Calif. Condo/Townhome	41	$ 369,420	$ 1,830	$ 73,230
Los Angeles Metropolitan Area	35	$ 414,970	$ 2,060	$ 82,260
Inland Empire	47	$ 281,000	$ 1,390	$ 55,700
San Francisco Bay Area	23	$ 748,330	$ 3,710	$ 148,330
United States	61	$ 205,200	$ 1,020	$ 40,670

San Francisco Bay Area
Alameda	23	$ 707,320	$ 3,510	$ 140,200
Contra-Costa (Central County)	21	$ 755,760	$ 3,750	$ 149,810
Marin	19	$ 1,036,050	$ 5,130	$ 205,370
Napa	34	$ 492,550	$ 2,440	$ 97,630
San Francisco	12	$ 1,175,850	$ 5,830	$ 233,080
San Mateo	14	$ 1,202,000	$ 5,960	$ 238,260
Santa Clara	22	$ 900,000	$ 4,460	$ 178,400
Solano	48	$ 337,000	$ 1,670	$ 66,800
Sonoma	31	$ 489,650	$ 2,430	$ 97,060
Southern California
Los Angeles	31	$ 434,710	$ 2,150	$ 86,170
Orange County	22	$ 685,680	$ 3,400	$ 135,920
Riverside County	42	$ 322,620	$ 1,600	$ 63,950
San Bernardino	58	$ 212,300	$ 1,050	$ 42,080
San Diego	28	$ 510,330	$ 2,530	$ 101,160
Ventura	28	$ 583,820	$ 2,890	$ 115,720
Central Coast
Monterey	29	$ 465,000	$ 2,300	$ 92,170
San Luis Obispo	30	$ 492,390	$ 2,440	$ 97,600
Santa Barbara	18	$ 680,550	$ 3,370	$ 134,900
Santa Cruz	22	$ 695,000	$ 3,440	$ 137,760
Central Valley
Fresno	51	$ 212,200	$ 1,050	$ 42,060
Kings County	62	$ 186,000	$ 920	$ 36,870
Madera	51	$ 212,500	$ 1,050	$ 42,120
Merced	60	$ 177,240	$ 880	$ 35,130
Placer County	46	$ 379,080	$ 1,880	$ 75,140
Sacramento	49	$ 275,810	$ 1,370	$ 54,670
San Joaquin	39	$ 269,400	$ 1,340	$ 53,400
Stanislaus	43	$ 237,200	$ 1,180	$ 47,020
Tulare	57	$ 175,930	$ 870	$ 34,870

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index

STATE/REGION/COUNTY	Q1 2015	Q4 2014		Q1 2014
Calif. Single-family home	34	31		33
Calif. Condo/Townhome	41	39		41
Los Angeles Metropolitan Area	35	34		35
Inland Empire	47	47		47
San Francisco Bay Area	23	21		23
United States	61	59		61

San Francisco Bay Area
Alameda	23	20		22
Contra-Costa (Central County)	21	23		24
Marin	19	15		15
Napa	34	24		28
San Francisco	12	11	r	13	r
San Mateo	14	15		14
Santa Clara	22	22		22
Solano	48	50		53
Sonoma	31	29		29
Southern California
Los Angeles	31	28		31
Orange County	22	21		21
Riverside County	42	41		42
San Bernardino	58	57		61
San Diego	28	27		27
Ventura	28	29		29
Central Coast
Monterey	29	27		23
San Luis Obispo	30	26		24
Santa Barbara	18	21		18
Santa Cruz	22	17		20
Central Valley
Fresno	51	53		54
Kings County	62	64		64
Madera	51	50	r	54	r
Merced	60	53		58
Placer County	46	45		45
Sacramento	49	49		50
San Joaquin	39	41		42
Stanislaus	43	44		46
Tulare	57	56		59

r = revised

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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