California housing affordability inches up in fourth quarter 2018, C.A.R. reports

- Twenty-eight percent of California households could afford to purchase the $564,270 median-priced home in the fourth quarter of 2018, up from 27 percent in third-quarter 2018 but down from 29 percent a year ago.

- A minimum annual income of $122,340 was needed to make monthly payments of $3,060, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.95 percent interest rate.

- Thirty-seven percent of home buyers were able to purchase the $460,000 median-priced condo or townhome. An annual income of $99,730 was required to make a monthly payment of $2,490.

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CALIFORNIA ASSOCIATION OF REALTORS

Feb 12, 2019, 12:20 ET

LOS ANGELES, Feb. 12, 2019 /PRNewswire/ -- Lower seasonal home prices allowed more Californians to afford a home purchase in the fourth quarter of 2018 compared to the previous quarter, but higher interest rates pushed affordability lower compared to the previous year, 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 fourth-quarter 2018 edged up to 28 percent from 27 percent in the third quarter of 2018 but was down from 29 percent in the fourth quarter a year ago, according to C.A.R.'s Traditional Housing Affordability Index (HAI). The index has been below 30 percent for six of the past eight quarters. 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.

A minimum annual income of $122,340 was needed to qualify for the purchase of a $564,270 statewide median-priced, existing single-family home in the fourth quarter of 2018. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,060, assuming a 20 percent down payment and an effective composite interest rate of 4.95 percent. The effective composite interest rate was 4.77 percent in third-quarter 2018 and 4.17 percent in fourth-quarter 2017.

Housing affordability for condominiums and townhomes also edged up in fourth-quarter 2018 compared to the previous quarter with 37 percent of California households earning the minimum income to qualify for the purchase of a $460,000 median-priced condominium/townhome, up from 36 percent in the third quarter. An annual income of $99,730 was required to make monthly payments of $2,490. Thirty-eight percent of households could afford to buy a condominium/townhome a year ago.

Compared with California, more than half of the nation's households (54 percent) could afford to purchase a $257,600 median-priced home, which required a minimum annual income of $55,850 to make monthly payments of $1,400.

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

Housing affordability improved from fourth-quarter 2017 in 10 tracked counties and declined in 30 counties. Affordability in eight counties remained flat.
In the San Francisco Bay Area, affordability improved from a year ago in Marin, San Francisco, San Mateo and Santa Clara counties, while Contra Costa and Solano counties saw a decline in housing affordability. Affordability held steady from a year ago in Alameda, Napa and Sonoma counties.
All but one county in the Southern California region posted a decrease in affordability compared to a year ago. Affordability declined in Los Angeles, Orange, Riverside, San Bernardino and San Diego counties. Only Ventura County recorded an improvement.
In the Central Valley Region, affordability held even only in two counties — Fresno and Stanislaus — while it fell from fourth-quarter 2017 in Kern, Kings, Madera, Merced, Placer, Sacramento, San Benito, San Joaquin and Tulare counties.
In the Central Coast region, affordability dropped from a year ago in San Luis Obispo and Santa Cruz but was unchanged in Monterey County. Housing affordability in Santa Barbara County jumped from 18 percent in fourth-quarter 2017 to 32 percent in fourth-quarter 2018, primarily due to a sharp drop in the median home price, which fell from $710,000 in fourth-quarter 2017 to $514,950 in fourth-quarter 2018.
During the fourth quarter of 2018, the most affordable counties in California were Lassen (66 percent), Kern (53 percent) and Kings and Siskiyou (both at 50 percent). The minimum annual income needed to qualify for a home in these counties was $52,030 or less.
Mono (12 percent), Santa Cruz (12 percent), San Mateo (15 percent), San Francisco (15 percent) and Santa Clara (18 percent) counties were the least affordable areas in the state. San Francisco and San Mateo counties had the highest minimum qualifying incomes in the state. An annual income of $326,290 was needed to purchase a home in San Francisco County, and an annual income of $329,300 was required in San Mateo County.

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 than 200,000 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 Fourth quarter 2018

STATE/REGION/COUNTY	4^th Qtr 2018	3^rd Qtr 2018		4^th Qtr 2017	Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
Calif. Single-family home	28	27		29	$564,270	$3,060	$122,340
Calif. Condo/Townhome	37	36	r	38	$460,000	$2,490	$99,730
Los Angeles Metro Area	30	30		31	$510,000	$2,760	$110,570
Inland Empire	40	41		43	$360,000	$1,950	$78,050
San Francisco Bay Area	22	21		21	$910,000	$4,930	$197,290
United States	54	53		56	$257,600	$1,400	$55,850

San Francisco Bay Area
Alameda	20	18		20	$890,000	$4,820	$192,960
Contra Costa	33	32		34	$638,000	$3,460	$138,320
Marin	19	19		18	$1,312,500	$7,110	$284,560
Napa	25	24		25	$714,000	$3,870	$154,800
San Francisco	15	15		12	$1,505,000	$8,160	$326,290
San Mateo	15	14		14	$1,518,890	$8,230	$329,300
Santa Clara	18	17		15	$1,250,000	$6,780	$271,010
Solano	39	38		44	$435,000	$2,360	$94,310
Sonoma	23	22		23	$640,000	$3,470	$138,760
Southern California
Los Angeles	24	22		25	$576,100	$3,120	$124,900
Orange	20	20		21	$799,000	$4,330	$173,230
Riverside	37	37		38	$400,000	$2,170	$86,720
San Bernardino	48	48		50	$295,000	$1,600	$63,960
San Diego	24	23		26	$625,950	$3,390	$135,710
Ventura	29	28		26	$649,000	$3,520	$140,710
Central Coast
Monterey	21	20		21	$615,000	$3,330	$133,340
San Luis Obispo	22	21		24	$620,650	$3,360	$134,560
Santa Barbara	32	26		18	$514,950	$2,790	$111,640
Santa Cruz	12	12		17	$885,000	$4,800	$191,870
Central Valley
Fresno	46	46		46	$269,000	$1,460	$58,320
Kern	53	53		54	$240,000	$1,300	$52,030
Kings	50	51		52	$231,000	$1,250	$50,080
Madera	47	48		49	$264,000	$1,430	$57,240
Merced	40	40		48	$270,950	$1,470	$58,740
Placer	42	42		44	$475,000	$2,570	$102,980
Sacramento	42	42		43	$363,000	$1,970	$78,700
San Benito	28	27		31	$586,000	$3,180	$127,050
San Joaquin	38	38		41	$365,000	$1,980	$73,130
Stanislaus	45	45		45	$312,500	$1,690	$67,750
Tulare	47	47		52	$235,000	$1,270	$50,950
Other Calif. Counties
Amador	NA	NA		44	NA	NA	NA
Butte	34	39		39	$339,500	$1,840	$73,610
Calaveras	45	43		50	$315,000	$1,710	$68,290
El Dorado	42	41		42	$474,000	$2,570	$102,770
Humboldt	33	33		34	$310,000	$1,680	$67,210
Lake	40	39		36	$259,000	$1,400	$56,150
Lassen	66	67		65	$175,000	$950	$37,940
Mariposa	38	40		48	$322,250	$1,750	$69,870
Mendocino	23	23		28	$420,000	$2,280	$91,060
Mono	12	11		19	$640,000	$3,470	$138,760
Nevada	35	32		39	$395,000	$2,140	$85,640
Plumas	42	44		45	$287,500	$1,560	$62,330
Shasta	45	44		47	$267,500	$1,450	$58,000
Siskiyou	50	47		51	$195,000	$1,060	$42,280
Sutter	44	45		52	$305,000	$1,650	$66,130
Tehama	46	49		56	$235,000	$1,270	$50,950
Tuolumne	48	41		48	$278,500	$1,510	$60,380
Yolo	37	35		34	$432,000	$2,340	$93,660
Yuba	44	48		42	$291,000	$1,580	$63,090