Higher wages and seasonal price declines hold California housing affordability in check, C.A.R. reports

- Thirty-one percent of California households could afford to purchase the $511,360 median-priced home in the fourth quarter, unchanged from third-quarter 2016 and up from 30 percent in fourth-quarter 2015.

- A minimum annual income of $100,800 was needed to make monthly payments of $2,520, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 3.91 percent interest rate.

- Forty percent of home buyers were able to purchase the $413,700 median-priced condo or townhome. An annual income of $81,550 was required to make a monthly payment of $2,040.

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CALIFORNIA ASSOCIATION OF REALTORS

Feb 09, 2017, 11:43 ET

LOS ANGELES, Feb. 9, 2017 /PRNewswire-USNewswire/ -- Rising wages and seasonal price declines held California's housing affordability steady in fourth-quarter 2016, even while interest rates rose moderately, 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 2016 remained at 31 percent, unchanged from the third quarter of 2016 but was up from 30 percent in fourth-quarter 2015, according to C.A.R.'s Traditional Housing Affordability Index (HAI). This is the 15th 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 third 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 $100,800 to qualify for the purchase of a $511,360 statewide median-priced, existing single-family home in the fourth quarter of 2016. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,520, assuming a 20 percent down payment and an effective composite interest rate of 3.91 percent. The effective composite interest rate in third-quarter 2016 was 3.76 percent and 4.07 percent in the fourth quarter of 2015.

Homes were slightly more affordable in fourth-quarter 2016 compared to fourth-quarter 2015, when the affordability index stood at 30 and the median home price was $484,710. An annual income of $96,980 was needed to make monthly payments of $2,420.

The affordability of condominiums and townhomes also was flat compare to the previous quarter. Forty percent of California households earned the minimum income to qualify for the purchase of a $413,700 median-priced condominium or townhome in the fourth quarter of 2016, and an annual income of $81,550 was required to make monthly payments of $2,040.

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

Compared to affordability in third-quarter 2016, eight of 29 counties tracked saw an improvement in housing affordability (Contra Costa, Marin, Napa, Los Angeles, Ventura, Monterey, Santa Barbara, and Madera), 10 experienced a decline (San Francisco, Sonoma, Orange County, Riverside, San Bernardino, Santa Cruz, Kern, Kings, Merced, and San Joaquin), and 11 were unchanged (Alameda, San Mateo, Santa Clara, Solano, San Diego, San Luis Obispo, Fresno, Placer, Sacramento, Stanislaus, and Tulare).
Only three (Contra Costa, Marin, Napa) of nine Bay Area counties recorded higher affordability numbers than the previous quarter, as higher earning Bay Area workers drove up home prices. Housing affordability results were mixed in Southern California but largely declined in Central Valley counties (Kern, Kings, Merced, San Joaquin).
During the fourth quarter of 2016, the most affordable counties in California were Kings (56 percent); Kern (55 percent); San Bernardino (54 percent); and Fresno (50 percent).
San Francisco (13 percent), San Mateo (15 percent), and Santa Cruz (17 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 third-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 than185,000 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 2016

C.A.R. Region	Housing Affordability Index	Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
Calif. Single-family home	31	$ 511,360	$ 2,520	$ 100,800
Calif. Condo/Townhomes	40	$ 413,700	$ 2,040	$ 81,550
Los Angeles Metropolitan Area	34	$ 463,050	$ 2,280	$ 91,280
Inland Empire	46	$ 317,710	$ 1,570	$ 62,630
San Francisco Bay Area	25	$ 797,170	$ 3,930	$ 157,140
United States	58	$ 235,000	$ 1,160	$ 46,320

San Francisco Bay Area
Alameda	22	$ 779,500	$ 3,840	$ 153,650
Contra-Costa	39	$ 550,000	$ 2,710	$ 108,410
Marin	20	$ 1,149,500	$ 5,660	$ 226,590
Napa	26	$ 620,000	$ 3,060	$ 122,210
San Francisco	13	$ 1,353,000	$ 6,670	$ 266,700
San Mateo	15	$ 1,300,000	$ 6,410	$ 256,250
Santa Clara	22	$ 1,005,000	$ 4,950	$ 198,100
Solano	45	$ 392,500	$ 1,930	$ 77,370
Sonoma	26	$ 589,000	$ 2,900	$ 116,100
Southern California
Los Angeles	28	$ 503,400	$ 2,480	$ 99,230
Orange County	22	$ 745,160	$ 3,670	$ 146,880
Riverside County	41	$ 356,380	$ 1,760	$ 70,250
San Bernardino	54	$ 251,100	$ 1,240	$ 49,500
San Diego	26	$ 593,040	$ 2,920	$ 116,900
Ventura	31	$ 629,860	$ 3,100	$ 124,160
Central Coast
Monterey	27	$ 507,000	$ 2,500	$ 99,940
San Luis Obispo	25	$ 566,550	$ 2,790	$ 111,680
Santa Barbara	21	$ 681,340	$ 3,360	$ 134,300
Santa Cruz	17	$ 800,000	$ 3,940	$ 157,690
Central Valley
Fresno	50	$ 237,300	$ 1,170	$ 46,780
Kern (Bakersfield)	55	$ 225,810	$ 1,110	$ 44,510
Kings County	56	$ 215,170	$ 1,060	$ 42,410
Madera	49	$ 229,790	$ 1,130	$ 45,300
Merced	48	$ 230,720	$ 1,140	$ 45,480
Placer County	46	$ 434,720	$ 2,140	$ 85,690
Sacramento	45	$ 324,300	$ 1,600	$ 63,930
San Joaquin	43	$ 324,570	$ 1,600	$ 63,980
Stanislaus	48	$ 276,000	$ 1,360	$ 54,400
Tulare	49	$ 212,680	$ 1,050	$ 41,920

r = revised

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

STATE/REGION/COUNTY	Q4 2016	Q3 2016		Q4 2015
Calif. Single-family home	31	31		30
Calif. Condo/Townhomes	40	40		39
Los Angeles Metropolitan Area	34	34		32
Inland Empire	46	46		45
San Francisco Bay Area	25	26	R	24
United States	58	57		58

San Francisco Bay Area
Alameda	22	22		22
Contra-Costa	39	37	R	38	r
Marin	20	19		17
Napa	26	25		21
San Francisco	13	14		11
San Mateo	15	15		14
Santa Clara	22	22		20
Solano	45	45		46	r
Sonoma	26	27		28	r
Southern California
Los Angeles	28	26		27
Orange County	22	23		21
Riverside County	41	42		39
San Bernardino	54	55		53
San Diego	26	26		25
Ventura	31	30		26
Central Coast
Monterey	27	25		25
San Luis Obispo	25	25		26
Santa Barbara	21	20		20
Santa Cruz	17	18		21
Central Valley
Fresno	50	50		49
Kern (Bakersfield)	55	56		55
Kings County	56	57		61
Madera	49	47		48
Merced	48	50		55
Placer County	46	46		44
Sacramento	45	45		46
San Joaquin	43	44		46	r
Stanislaus	48	48		45	r
Tulare	49	49		54