California housing affordability holds steady in third quarter as rising wages and lower interest rates failed to improve purchasing power for home buyers, C.A.R. reports

- Thirty-one percent of California households could afford to purchase the $515,940 median-priced home in the third quarter, unchanged from second-quarter 2016 and up from 29 percent in third-quarter 2015.

- A minimum annual income of $100,290 was needed to make monthly payments of $2,510, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 3.76 percent interest rate.

- Forty percent of home buyers were able to purchase the $418,230 median-priced condo or townhome. An annual income of $81,290 was required to make a monthly payment of $2,030.

News provided by

CALIFORNIA ASSOCIATION OF REALTORS

Nov 09, 2016, 11:45 ET

LOS ANGELES, Nov. 9, 2016 /PRNewswire-USNewswire/ -- Rising wages and slightly lower interest rates did little to improve California's housing affordability, which remained flat compared to the previous quarter, 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 2016 remained at 31 percent, unchanged from the second quarter of 2016 but was up from 29 percent in third-quarter 2015, according to C.A.R.'s Traditional Housing Affordability Index (HAI). This is the 14th 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 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.

Home buyers needed to earn a minimum annual income of $100,290 to qualify for the purchase of a $515,940 statewide median-priced, existing single-family home in the third quarter of 2016. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,510, assuming a 20 percent down payment and an effective composite interest rate of 3.76 percent. The effective composite interest rate in second-quarter 2016 was 3.85 percent and 4.15 percent in the third quarter of 2015.

Homes were slightly more affordable in third-quarter 2016 compared to third-quarter 2015, when the affordability index stood at 29 and the median home price was $487,420. An annual income of $98,350 was needed to make monthly payments of $2,460.

The affordability of condominiums and townhomes also were flat compared to the previous quarter. Forty percent of California households earned the minimum income to qualify for the purchase of a $418,230 median-priced condominium or townhome in the third quarter of 2016, and an annual income of $81,290 was required to make monthly payments of $2,030.

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

Compared to affordability in second-quarter 2016, 13 of 29 counties tracked saw an improvement in housing affordability (Alameda, Contra Costa, Marin, San Francisco, San Mateo, Santa Clara, Sonoma, Orange County, Riverside County, Ventura, Santa Cruz, Kern, and Kings), seven experienced a decline (Los Angeles, San Bernardino, San Luis Obispo, Madera, Merced, San Joaquin, and Tulare), and nine were unchanged (Napa, Solano, San Diego, Monterey, Santa Barbara, Fresno, Placer, Sacramento, and Stanislaus).
Seven of nine Bay Area counties recorded higher affordability numbers than the previous quarter, while affordability results in Southern California and Central Valley regions were mixed.
During the third quarter of 2016, the most affordable counties in California were Kings (57 percent); Kern (56 percent); San Bernardino (55 percent); and Fresno and Merced, both at 50 percent.
San Francisco (14 percent), San Mateo (15 percent), and Marin (19 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 (2006-2016)

See C.A.R.'s historical housing affordability data.
See second-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 than 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
Third 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	$ 515,940	$ 2,510	$ 100,290
Calif. Condo/Townhomes	40	$ 418,230	$ 2,030	$ 81,290
Los Angeles Metropolitan Area	34	$ 468,600	$ 2,280	$ 91,090
Inland Empire	46	$ 318,960	$ 1,550	$ 62,000
San Francisco Bay Area	25	$ 785,980	$ 3,820	$ 152,780
United States	57	$ 240,900	$ 1,170	$ 46,830

San Francisco Bay Area
Alameda	22	$ 795,400	$ 3,870	$ 154,610
Contra-Costa	35	$ 601,510	$ 2,920	$ 116,920
Marin	19	$ 1,185,000	$ 5,760	$ 230,340
Napa	25	$ 639,000	$ 3,110	$ 124,210
San Francisco	14	$ 1,298,000	$ 6,310	$ 252,300
San Mateo	15	$ 1,300,000	$ 6,320	$ 252,690
Santa Clara	22	$ 1,000,000	$ 4,860	$ 194,380
Solano	45	$ 393,000	$ 1,910	$ 76,390
Sonoma	27	$ 580,500	$ 2,820	$ 112,840
Southern California
Los Angeles	26	$ 536,720	$ 2,610	$ 104,330
Orange County	23	$ 740,070	$ 3,600	$ 143,850
Riverside County	42	$ 358,510	$ 1,740	$ 69,690
San Bernardino	55	$ 248,280	$ 1,210	$ 48,260
San Diego	26	$ 589,260	$ 2,860	$ 114,540
Ventura	30	$ 642,740	$ 3,120	$ 124,930
Central Coast
Monterey	25	$ 539,000	$ 2,620	$ 104,770
San Luis Obispo	25	$ 574,930	$ 2,790	$ 111,750
Santa Barbara	20	$ 717,460	$ 3,490	$ 139,460
Santa Cruz	18	$ 793,000	$ 3,850	$ 154,140
Central Valley
Fresno	50	$ 238,260	$ 1,160	$ 46,310
Kern (Bakersfield)	56	$ 224,670	$ 1,090	$ 43,670
Kings County	57	$ 210,140	$ 1,020	$ 40,850
Madera	47	$ 238,160	$ 1,160	$ 46,290
Merced	50	$ 219,950	$ 1,070	$ 42,750
Placer County	46	$ 439,500	$ 2,140	$ 85,430
Sacramento	45	$ 327,040	$ 1,590	$ 63,570
San Joaquin	44	$ 321,250	$ 1,560	$ 62,440
Stanislaus	48	$ 273,550	$ 1,330	$ 53,170
Tulare	49	$ 212,570	$ 1,030	$ 41,320

r = revised

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
Third quarter 2016
STATE/REGION/COUNTY	Q3 2016	Q2 2016	Q3 2015
Calif. Single-family	31	31	29
Calif. Condo/Townhomes	40	40	39
Los Angeles Metropolitan Area	34	33	31
Inland Empire	46	46	45
San Francisco Bay Area	25	23	23
United States	57	57	57

San Francisco Bay Area
Alameda	22	20	20
Contra-Costa	35	32	34
Marin	19	18	19
Napa	25	25	23
San Francisco	14	13	11
San Mateo	15	14	13
Santa Clara	22	19	19
Solano	45	45	45
Sonoma	27	26	26
Southern California
Los Angeles	26	30	24
Orange County	23	22	20
Riverside County	42	41	39
San Bernardino	55	56	54
San Diego	26	26	24
Ventura	30	29	25
Central Coast
Monterey	25	25	27
San Luis Obispo	25	27	27
Santa Barbara	20	20	17
Santa Cruz	18	17	19
Central Valley
Fresno	50	50	49
Kern (Bakersfield)	56	54	53
Kings County	57	56	60
Madera	47	50	49
Merced	50	52	55
Placer County	46	46	44
Sacramento	45	45	47
San Joaquin	44	45	36
Stanislaus	48	48	40
Tulare	49	50	53