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Higher home prices, rising interest rates depress California housing affordability, C.A.R. reports

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Higher home prices, rising interest rates depress California housing affordability, C.A.R. reports

Housing affordability falls to 10-year lows, extending into traditionally more affordable regions

-- Twenty-six percent of California households could afford to purchase the $596,730 median-priced home in the second quarter of 2018, down from 31 percent in first-quarter 2018 and down from 29 percent a year ago.

-- A minimum annual income of $126,490 was needed to make monthly payments of $3,160, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.70 percent interest rate.

-- Thirty-six percent of home buyers were able to purchase the $477,790 median-priced condo or townhome. An annual income of $101,270 was required to make a monthly payment of $2,530.

PR Newswire

LOS ANGELES, Aug. 8, 2018 /PRNewswire/ -- Record home price increases and higher interest rates combined to constrain California housing affordability to the lowest levels in 10 years, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

CALIFORNIA ASSOCIATION OF REALTORS (PRNewsFoto/C.A.R.)

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in second-quarter 2018 fell to 26 percent from 31 percent in the first quarter of 2018 and was down from 29 percent in the second quarter a year ago, according to C.A.R.'s Traditional Housing Affordability Index (HAI). This is the 21st consecutive quarter that the index has been below 40 percent. 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.

A minimum annual income of $126,490 was needed to qualify for the purchase of a $596,730 statewide median-priced, existing single-family home in the second quarter of 2018. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,160, assuming a 20 percent down payment and an effective composite interest rate of 4.70 percent. The effective composite interest rate in first-quarter 2018 was 4.44 percent and 4.09 percent in the second quarter of 2017.

While low housing affordability may be typical in many Bay Area counties, more traditionally affordable areas were at 10-year lows in the second quarter. Those that reached the decade-low include Alameda, Merced, Orange, Riverside, Sacramento, San Bernardino, San Diego, San Mateo, Santa Clara, Santa Cruz, and Sonoma.

Housing affordability for condominiums and townhomes also fell in second-quarter 2018 compared to the previous quarter with 36 percent of California households earning the minimum income to qualify for the purchase of a $477,790 median-priced condominium/townhome, down from 39 percent in the first quarter. An annual income of $101,270 was required to make monthly payments of $2,530.

Key points from the second-quarter 2018 Housing Affordability report include:

  • Housing affordability improved from second-quarter 2017 in 8 tracked counties and declined in 37 counties. Affordability in four counties remained flat.
  • In the San Francisco Bay Area, affordability improved from a year ago in San Francisco and Marin counties, primarily due to higher wages. Affordability fell in five counties (Alameda, Contra Costa, Santa Clara, Solano, and Sonoma). Affordability held steady in Napa and San Mateo counties.
  • In Southern California, affordability improved only in Ventura, and dropped in five counties (Los Angeles, Orange, Riverside, San Bernardino, and San Diego) compared to a year ago.
  • In the Central Valley, only Madera County saw an improvement in affordability from second-quarter 2017. Housing affordability decreased from a year ago in nine counties (Kern, Kings, Merced, Placer, Sacramento, San Benito, San Joaquin, Stanislaus and Tulare). Affordability held steady only in Fresno County.
  • In the Central Coast region, only Santa Barbara experienced a year-to-year improvement in affordability, while three counties (Monterey, San Luis Obispo, and Santa Cruz) posted a decline.
  • During the second quarter of 2018, the most affordable counties in California were Lassen (64 percent), Kern (53 percent), Madera (52 percent), Tehama (51 percent) and Kings (50 percent).
  • Santa Cruz (12 percent), San Francisco, San Mateo, and Mono (all at 14 percent), and Alameda and Santa Clara (both at 16 percent) counties were the least affordable areas in the state.  

Housing Affordability slides (click link to open)

Affordability peak versus current
Annual required income peak vs. current
Monthly PITI peak versus current
Affordability by region peak versus current
Housing affordability by county

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 more than190,000 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 2018


STATE/REGION/COUNTY

2nd Qtr.

2018

Median
Home Price

Monthly
Payment
Including
Taxes &
Insurance

Minimum
Qualifying
Income

Calif. Single-family Home

26

$596,730

$3,160

$126,490

Calif. Condo/Townhome

36

$477,790

$2,530

$101,270

Los Angeles Metro Area

29

$530,000

$2,810

$112,340

Inland Empire

41

$360,000

$1,910

$76,310

San Francisco Bay Area

18

$1,035,000

$5,480

$219,380

United States

53

$269,000

$1,430

$57,020






San Francisco Bay Area





Alameda

16

$1,000,000

$5,300

$211,960

Contra Costa

29

$695,000

$3,680

$147,320

Marin

18

$1,400,000

$7,420

$296,750

Napa

25

$707,250

$3,750

$149,910

San Francisco

14

$1,625,000

$8,610

$344,440

San Mateo

14

$1,650,000

$8,740

$349,740

Santa Clara

16

$1,405,000

$7,450

$297,810

Solano

38

$450,000

$2,380

$95,380

Sonoma

20

$695,000

$3,680

$147,320

Southern California





Los Angeles

26

$557,220

$2,950

$118,110

Orange

20

$830,000

$4,400

$175,930

Riverside

37

$405,000

$2,150

$85,850

San Bernardino

49

$290,000

$1,540

$61,470

San Diego

23

$645,000

$3,420

$136,720

Ventura

28

$670,000

$3,550

$142,020

Central Coast





Monterey

19

$647,000

$3,430

$137,140

San Luis Obispo

22

$618,500

$3,280

$131,100

Santa Barbara

20

$695,000

$3,680

$147,320

Santa Cruz

12

$905,000

$4,800

$191,830

Central Valley





Fresno

47

$268,390

$1,420

$56,890

Kern

53

$244,000

$1,290

$51,720

Kings

50

$235,000

$1,250

$49,810

Madera

52

$238,000

$1,260

$50,450

Merced

42

$265,000

$1,400

$56,170

Placer

41

$495,900

$2,630

$105,110

Sacramento

41

$374,000

$1,980

$79,270

San Benito

30

$571,000

$3,030

$121,030

San Joaquin

38

$373,380

$1,980

$79,140

Stanislaus

45

$315,000

$1,670

$66,770

Tulare

48

$233,000

$1,230

$49,390

Other Calif. Counties





Amador

44

$335,000

$1,780

$71,010

Butte

38

$320,000

$1,700

$67,830

Calaveras

43

$329,000

$1,740

$69,740

El Dorado

38

$525,000

$2,780

$111,280

Humboldt

33

$315,000

$1,670

$66,770

Lake County

37

$283,000

$1,500

$59,990

Lassen

64

$192,500

$1,020

$40,800

Mariposa

39

$320,000

$1,700

$67,830

Mendocino

22

$430,000

$2,280

$91,140

Mono

14

$624,500

$3,310

$132,370

Nevada

32

$435,000

$2,310

$92,200

Plumas

42

$297,000

$1,570

$62,950

Shasta

46

$265,500

$1,410

$56,280

Siskiyou

48

$207,500

$1,100

$43,980

Sutter

45

$299,950

$1,590

$63,580

Tehama

51

$215,900

$1,140

$45,760

Tuolumne

43

$308,500

$1,630

$65,390

Yolo

33

$469,500

$2,490

$99,520

Yuba

45

$290,000

$1,540

$61,470




CALIFORNIA ASSOCIATION OF REALTORS®

Traditional Housing Affordability Index

Second quarter 2018


STATE/REGION/COUNTY

2nd Qtr.
2018

1st Qtr.
2018


2nd Qtr.
2017


Calif. Single-family home

26

31


29


Calif. Condo/Townhome

36

39


38


Los Angeles Metro Area

29

32


31


Inland Empire

41

43


43


San Francisco Bay Area

18

23


21


United States

53

57


55








San Francisco Bay Area






Alameda

16

22


19


Contra Costa

29

36


31


Marin

18

18


17


Napa

25

28


25


San Francisco

14

15


12


San Mateo

14

15


14


Santa Clara

16

17


17


Solano

38

42


44


Sonoma

20

21


25


Southern California






Los Angeles

26

28


28


Orange

20

21


21


Riverside

37

39


39


San Bernardino

49

52


51


San Diego

23

26


26


Ventura

28

31


27


Central Coast






Monterey

19

23


21


San Luis Obispo

22

25


26


Santa Barbara

20

22


16


Santa Cruz

12

15


17


Central Valley






Fresno

47

49


47


Kern

53

56


54


Kings

50

52


52


Madera

52

50


44


Merced

42

43


48


Placer

41

44


43


Sacramento

41

44


45


San Benito

30

32


33


San Joaquin

38

40


43


Stanislaus

45

48


47


Tulare

48

50


52


Other Calif. Counties






Amador

44

45


42


Butte

38

41


39


Calaveras

43

46


49


El Dorado

38

42


40


Humboldt

33

36


36


Lake County

37

40


38


Lassen

64

68


64


Mariposa

39

44


50

r

Mendocino

22

25


27


Mono

14

8


25


Nevada

32

37


39


Plumas

42

47


47


Shasta

46

49


47


Siskiyou

48

48


47


Sutter

45

49


53


Tehama

51

51


57


Tuolumne

43

49


46


Yolo

33

41


35


Yuba

45

49


43


r = revised

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/higher-home-prices-rising-interest-rates-depress-california-housing-affordability-car-reports-300693825.html

SOURCE CALIFORNIA ASSOCIATION OF REALTORS

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