Strong seasonal home prices weaken housing affordability in second quarter, C.A.R. reports

Minimum annual income required to purchase hits six digits for first time since Great Recession

- Thirty-one percent of California households could afford to purchase the $516,220 median-priced home in the second quarter, down from 34 percent in first-quarter 2016 and up from 30 percent in second-quarter 2015.

- A minimum annual income of $101,217 was needed to make monthly payments of $2,530, including principal, interest, and taxes on a 30-year fixed-rate mortgage at 3.85 percent interest rate.

- Forty percent of home buyers were able to purchase the $411,390 median-priced condo or townhome. An annual income of $80,663 was required to make a monthly payment of $2,017.

News provided by

CALIFORNIA ASSOCIATION OF REALTORS

Aug 10, 2016, 12:12 ET

LOS ANGELES, Aug. 10, 2016 /PRNewswire-USNewswire/ -- Lower interest rates failed to offset strong seasonal price increases, making it harder for Californians to purchase a home in the second quarter of 2016, 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 2016 fell to 31 percent from the 34 percent recorded in the first quarter of 2016 and was up from 30 percent in second-quarter 2015, according to C.A.R.'s Traditional Housing Affordability Index (HAI). This is the 13th consecutive quarter that the index has been below 40 percent and is near the mid-2008 low level of 29 percent. 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 $101,217 to qualify for the purchase of a $516,220 statewide median-priced, existing single-family home in the second quarter of 2016. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,530, assuming a 20 percent down payment and an effective composite interest rate of 3.85 percent. The effective composite interest rate in first-quarter 2016 was 4.01 percent and 3.95 percent in the second quarter of 2015.

Homes were slightly more affordable in second-quarter 2016 compared to a year ago, when the affordability index stood at 30 and the median home price was $488,500. An annual income of $96,650 was needed to make monthly payments of $2,420.

Condominiums and townhomes also were slightly less affordable than in the previous quarter. Forty percent of California households earned the minimum income to qualify for the purchase of a condominium or townhome in the second quarter of 2016, down from 41 percent in the first quarter of 2016. An annual income of $80,663 was required to make monthly payments of $2,017.

Key points from the second-quarter 2016 Housing Affordability report include:

Compared to affordability in first-quarter 2016, 25 of 29 counties tracked saw a decrease in housing affordability, two experienced an improvement (Napa and San Luis Obispo), and two were unchanged (San Francisco and Madera).
Seven of nine Bay Area counties recorded lower affordability numbers as did all six Southern California regions. Nine of 10 Central Valley counties and three of four Central Coast counties also saw lower affordability, compared to the previous quarter.
During the second quarter of 2016, the most affordable counties in California were Kings (56 percent); San Bernardino (56 percent); Kern (54 percent); and Fresno, Madera, and Tulare all at 50 percent.
San Francisco (13 percent), San Mateo (14 percent), and Santa Cruz (17 percent) counties were the least affordable areas of the state.

Housing Affordability slides (click link to open)

Affordability peak versus current
Annual required income peak vs. current
PITI peak versus current
Regional comparison (2006-2016)

See C.A.R.'s historical housing affordability data.
See first-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 185,000 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 2016

C.A.R. Region	Housing Affordability Index	Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
Calif. Single-family home	31	$ 516,220	$ 2,530	$ 101,217
Calif. Condo/Townhomes	40	$ 411,390	$ 2,017	$ 80,663
Los Angeles Metro Area	33	$ 470,330	$ 2,305	$ 92,219
Inland Empire	46	$ 315,500	$ 1,547	$ 61,861
San Francisco Bay Area	23	$ 840,920	$ 4,122	$ 164,882
United States	57	$ 240,700	$ 1,180	$ 47,195

San Francisco Bay Area
Alameda	20	$ 825,700	$ 4,047	$ 161,898
Contra-Costa	32	$ 628,150	$ 3,079	$ 123,164
Marin	18	$ 1,225,000	$ 6,005	$ 240,190
Napa	25	$ 630,000	$ 3,088	$ 123,526
San Francisco	13	$ 1,375,000	$ 6,740	$ 269,601
San Mateo	14	$ 1,330,000	$ 6,519	$ 260,778
Santa Clara	19	$ 1,085,000	$ 5,318	$ 212,740
Solano	45	$ 386,000	$ 1,892	$ 75,684
Sonoma	26	$ 585,000	$ 2,868	$ 114,703
Southern California
Los Angeles	30	$ 480,040	$ 2,353	$ 94,123
Orange County	22	$ 742,220	$ 3,638	$ 145,530
Riverside County	41	$ 355,320	$ 1,742	$ 69,669
San Bernardino	56	$ 242,370	$ 1,188	$ 47,522
San Diego	26	$ 589,910	$ 2,892	$ 115,666
Ventura	29	$ 647,320	$ 3,173	$ 126,922
Central Coast
Monterey	25	$ 535,000	$ 2,622	$ 104,899
San Luis Obispo	27	$ 546,620	$ 2,679	$ 107,178
Santa Barbara	20	$ 703,460	$ 3,448	$ 137,930
Santa Cruz	17	$ 799,000	$ 3,917	$ 156,663
Central Valley
Fresno	50	$ 235,020	$ 1,152	$ 46,081
Kern (Bakersfield)	54	$ 228,950	$ 1,122	$ 44,891
Kings County	56	$ 212,660	$ 1,042	$ 41,697
Madera	50	$ 221,700	$ 1,087	$ 43,469
Merced	52	$ 212,080	$ 1,040	$ 41,583
Placer County	46	$ 438,490	$ 2,149	$ 85,976
Sacramento	45	$ 323,710	$ 1,587	$ 63,471
San Joaquin	45	$ 313,840	$ 1,538	$ 61,536
Stanislaus	48	$ 271,940	$ 1,333	$ 53,320
Tulare	50	$ 207,700	$ 1,018	$ 40,724

r = revised

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
Second quarter 2016

STATE/REGION/COUNTY	Q2 2016	Q1 2016		Q2 2015
Calif. Single-family home	31	34		30
Calif. Condo/Townhomes	40	41		39
Los Angeles Metropolitan Area	33	35		32
Inland Empire	46	48		46
San Francisco Bay Area	23	27		23	r
United States	57	60		57

San Francisco Bay Area
Alameda	20	23		20	r
Contra-Costa	32	38		34	r
Marin	18	20		17
Napa	25	23	r	24	r
San Francisco	13	13		10
San Mateo	14	16		13
Santa Clara	19	22		19
Solano	45	48	r	46
Sonoma	26	28	r	27	r
Southern California
Los Angeles	30	31		30
Orange County	22	23		21
Riverside County	41	42		40
San Bernardino	56	57		56
San Diego	26	28		25
Ventura	29	30		25
Central Coast
Monterey	25	27		27
San Luis Obispo	27	26		28
Santa Barbara	20	21		15	r
Santa Cruz	17	18		20
Central Valley
Fresno	50	52		50
Kern (Bakersfield)	54	55		54
Kings County	56	58		62
Madera	50	50		50
Merced	52	55		55
Placer County	46	48		44
Sacramento	45	48		47
San Joaquin	45	47		37
Stanislaus	48	50		41
Tulare	50	52		54