California housing affordability drops to lowest level in 10 years, C.A.R. reports

- Twenty-eight percent of California households could afford to purchase the $555,680 median-priced home in the third quarter of 2017, down from 29 percent in second-quarter 2017 and down from 31 percent in third-quarter 2016.

- A minimum annual income of $112,100 was needed to make monthly payments of $2,800, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.16 percent interest rate.

- Thirty-eight percent of home buyers were able to purchase the $440,000 median-priced condo or townhome. An annual income of $88,770 was required to make a monthly payment of $2,220.

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CALIFORNIA ASSOCIATION OF REALTORS

Nov 02, 2017, 09:49 ET

LOS ANGELES, Nov. 2, 2017 /PRNewswire-USNewswire/ -- California's housing affordability hit a 10-year low as tight housing inventory drove home prices higher and reduced purchasing power for homebuyers in the third quarter, primarily in previously more affordable regions such as the Inland Empire and Central Valley, 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 third-quarter 2017 fell to 28 percent, down from 29 percent in the second quarter of 2017 and down from 31 percent in the third quarter a year ago, according to C.A.R.'s Traditional Housing Affordability Index (HAI). This is the 18th consecutive quarter that the index has been below 40 percent and the lowest since third-quarter 2015. 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 homebuyers in the state.

A minimum annual income of $112,100 was needed to qualify for the purchase of a $555,680 statewide median-priced, existing single-family home in the third quarter of 2017. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,800, assuming a 20 percent down payment and an effective composite interest rate of 4.16 percent. The effective composite interest rate in second-quarter 2017 was 4.09 percent and 3.76 percent in the third quarter of 2016.

Of particular note, housing affordability in Los Angeles County dropped 6 points from an index of 28 in the second quarter to an index of 22 in the third quarter as the area's median home price jumped $81,000 in one quarter to reach nearly $600,000. Meanwhile, affordability improved in the Bay Area as prices leveled off from peaks across the region, most notably an $80,000 decline in San Francisco and a $77,500 decrease in Marin.

The affordability of condominiums and townhomes dipped in third-quarter 2017 compared to the previous quarter with 38 percent of California households earning the minimum income to qualify for the purchase of a $440,000 median-priced condominium/townhome, down from 39 in the second quarter. An annual income of $88,770 was required to make monthly payments of $2,220. Thirty-eight percent of households could afford to purchase the $443,400 priced condo or townhome in second-quarter 2017.

Key points from the third-quarter 2017 Housing Affordability report include:

Compared to second-quarter 2017, housing affordability generally declined in Southern California and the Central Valley, but improved slightly across the Bay Area. Affordability improved in 15 of 43 tracked counties (Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Monterey, Santa Barbara, Placer, Amador, Butte, El Dorado, Mendocino, Shasta, and Siskiyou).
Eighteen counties experienced a decline in housing affordability (Solano, Los Angeles, Riverside, San Luis Obispo, Fresno, Kern, Madera, Merced, Sacramento, San Benito, San Joaquin, Stanislaus, Tulare, Humboldt, Mariposa/Tuolumne, Sutter, Tehama, and Yolo).
Housing affordability was unchanged in 10 counties (Santa Clara, Sonoma, Orange County, San Bernardino, San Diego, Ventura, Santa Cruz, Kings, Lake, and Yuba).
During the third quarter of 2017, the most affordable counties in California were Tehama (56 percent), Kern (53 percent), and Kings, (52 percent).
San Francisco (13 percent), San Mateo (15 percent), Santa Clara and Santa Cruz (both at 17 percent), and Marin (18 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
PITI peak versus current
CA housing affordability by quarter (2006-2017)
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
Third Quarter 2017

C.A.R. Region	Housing Affordability Index	Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
Calif. Single-family home	28	$ 555,680	$ 2,800	$ 112,100
Calif. Condo/Townhome	38	$ 440,000	$ 2,220	$ 88,770
Los Angeles Metro Area	30	$ 502,000	$ 2,530	$ 101,270
Inland Empire	43	$ 339,900	$ 1,710	$ 68,570
San Francisco Bay Area	23	$ 860,000	$ 4,340	$ 173,500
United States	55	$ 254,000	$ 1,280	$ 51,240

San Francisco Bay Area
Alameda	20	$ 865,000	$ 4,360	$ 174,500
Contra-Costa	33	$ 624,450	$ 3,150	$ 125,980
Marin	18	$ 1,225,000	$ 6,180	$ 247,130
Napa	26	$ 653,000	$ 3,290	$ 131,740
San Francisco	13	$ 1,370,000	$ 6,910	$ 276,380
San Mateo	15	$ 1,441,250	$ 7,270	$ 290,760
Santa Clara	17	$ 1,165,000	$ 5,880	$ 235,030
Solano	43	$ 415,750	$ 2,100	$ 83,870
Sonoma	25	$ 630,000	$ 3,180	$ 127,100
Southern California
Los Angeles	22	$ 595,110	$ 3,000	$ 120,060
Orange County	21	$ 790,000	$ 3,980	$ 159,370
Riverside County	38	$ 387,000	$ 1,950	$ 78,070
San Bernardino	51	$ 270,000	$ 1,360	$ 54,470
San Diego	26	$ 607,000	$ 3,060	$ 122,460
Ventura	27	$ 634,000	$ 3,200	$ 127,900
Central Coast
Monterey	22	$ 585,000	$ 2,950	$ 118,020
San Luis Obispo	23	$ 599,000	$ 3,020	$ 120,840
Santa Barbara	20	$ 664,540	$ 3,350	$ 134,060
Santa Cruz	17	$ 830,000	$ 4,190	$ 167,440
Central Valley
Fresno	45	$ 259,900	$ 1,310	$ 52,430
Kern (Bakersfield)	53	$ 235,000	$ 1,190	$ 47,410
Kings County	52	$ 225,000	$ 1,130	$ 45,390
Madera	41	$ 280,000	$ 1,410	$ 56,490
Merced	47	$ 255,000	$ 1,290	$ 51,440
Placer County	44	$ 455,000	$ 2,290	$ 91,790
Sacramento	43	$ 350,000	$ 1,770	$ 70,610
San Benito	31	$ 550,000	$ 2,770	$ 110,960
San Joaquin	41	$ 352,250	$ 1,780	$ 71,060
Stanislaus	46	$ 295,000	$ 1,490	$ 59,510
Tulare	51	$ 225,000	$ 1,130	$ 45,390
Other Calif. Counties
Amador	44	$ 320,000	$ 1,610	$ 64,560
Butte County	40	$ 299,900	$ 1,510	$ 60,500
El Dorado County	41	$ 462,750	$ 2,330	$ 93,350
Humboldt	33	$ 318,000	$ 1,600	$ 64,150
Lake County	38	$ 249,950	$ 1,260	$ 50,420
Mariposa/Tuolumne	45	$ 289,000	$ 1,460	$ 58,300
Mendocino	28	$ 391,000	$ 1,970	$ 78,880
Shasta	48	$ 250,000	$ 1,260	$ 50,430
Siskiyou County	49	$ 203,500	$ 1,030	$ 41,050
Sutter	51	$ 280,600	$ 1,420	$ 56,610
Tehama	56	$ 208,500	$ 1,050	$ 42,060
Yolo	34	$ 435,000	$ 2,190	$ 87,760
Yuba	43	$ 268,520	$ 1,350	$ 54,170

r = revised



CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
Third Quarter 2017

STATE/REGION/COUNTY	Q3 2017	Q2 2017		Q3 2016
Calif. Single-family home	28	29		31
Calif. Condo/Townhome	38	39	r	40
Los Angeles Metro Area	30	31		34
Inland Empire	43	43		47	r
San Francisco Bay Area	23	21		27	r
United States	55	55		57

San Francisco Bay Area
Alameda	20	19		24	r
Contra-Costa (Central County)	33	31		37	r
Marin	18	17		19
Napa	26	25		25
San Francisco	13	12		14
San Mateo	15	14		15
Santa Clara	17	17		22
Solano	43	44		45
Sonoma	25	25		27
Southern California
Los Angeles	22	28		26
Orange County	21	21		23
Riverside County	38	39		42
San Bernardino	51	51		55
San Diego	26	26		28	r
Ventura	27	27		34	r
Central Coast
Monterey	22	21		25
San Luis Obispo	23	26		27	r
Santa Barbara	20	16		20
Santa Cruz	17	17		18
Central Valley
Fresno	45	47		50
Kern (Bakersfield)	53	54		56
Kings County	52	52		58	r
Madera	41	44		48	r
Merced	47	48		51	r
Placer County	44	43		47	r
Sacramento	43	45		46	r
San Benito	31	33		34
San Joaquin	41	43		45	r
Stanislaus	46	47		49	r
Tulare	51	52		50	r
Other Calif. Counties
Amador	44	42		53
Butte County	40	39		44
El Dorado County	41	40		40
Humboldt	33	36		40
Lake County	38	38		46
Mariposa And Tuolumne	45	46		50
Mendocino	28	27		33
Shasta	48	47		48
Siskiyou County	49	47		51
Sutter	51	53		51
Tehama	56	57		59
Yolo	34	35		36
Yuba	43	43		46