Strong wage growth and steady home prices buoy California housing affordability, C.A.R. reports

Twenty-eight regions see improvement from previous quarter, with six of nine Bay Area counties posting higher

- Thirty-one percent of California households could afford to purchase the $538,640 median-priced home in the first quarter of 2018, up from 29 percent in fourth-quarter 2017 but down from 32 percent a year ago.

- A minimum annual income of $111,500 was needed to make monthly payments of $2,790, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.44 percent interest rate.

- Thirty-nine percent of homebuyers were able to purchase the $449,720 median-priced condo or townhome. An annual income of $93,090 was required to make a monthly payment of $2,330.

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CALIFORNIA ASSOCIATION OF REALTORS

May 15, 2018, 10:30 ET

LOS ANGELES, May 15, 2018 /PRNewswire-USNewswire/ -- Higher wages and lower seasonal home prices combined to push California's housing affordability higher in the first quarter of 2018, compared to the previous quarter, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

The percentage of homebuyers who could afford to purchase a median-priced, existing single-family home in California in first-quarter 2018 edged up to 31 percent from 29 percent in the fourth quarter of 2017 but was down from 32 percent in the first quarter a year ago, according to C.A.R.'s Traditional Housing Affordability Index (HAI). This is the 20th consecutive quarter that the index has been below 40 percent. 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 $111,500 was needed to qualify for the purchase of a $538,640 statewide median-priced, existing single-family home in the first quarter of 2018. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,790, assuming a 20 percent down payment and an effective composite interest rate of 4.44 percent. The effective composite interest rate in fourth-quarter 2017 was 4.17 percent and 4.36 percent in the first quarter of 2017.

Condominiums and townhomes also were more affordable in first-quarter 2018 compared to the previous quarter with 39 percent of California households earning the minimum income to qualify for the purchase of a $449,720 median-priced condominium/townhome, up from 38 percent in the fourth quarter. An annual income of $93,090 was required to make monthly payments of $2,330.

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

Housing affordability improved from fourth-quarter 2017 in 28 tracked counties and declined in 14 counties. Affordability in six counties was unchanged.
Strong wage growth in the San Francisco Bay Area pushed affordability higher from the previous quarter in six of nine Bay Area counties (Alameda, Contra Costa, Napa, San Francisco, San Mateo, and Santa Clara). Affordability decreased in two Bay Area counties (Solano and Sonoma) and held steady in Marin.
In Southern California, affordability improved in Los Angeles, Riverside, San Bernardino, and Ventura counties, while affordability in Orange and San Diego counties remained flat during first-quarter 2018.
In the Central Valley, six counties posted an increase in affordability from the previous quarter (Fresno, Kern, Madera, Sacramento, San Benito, and Stanislaus). Affordability in Merced, San Joaquin, and Tulare declined but held steady in Kings and Placer counties.
Affordability in the Central Coast improved moderately, driven by flat or declining home prices. Monterey, San Luis Obispo, and Santa Barbara experienced higher affordability, while Santa Cruz posted a decline as a result of subdued wage growth and price declines.
During the first quarter of 2018, the most affordable counties in California were Lassen (68 percent), Kern (56 percent), and Kings and San Bernardino (both at 52 percent).
Mono (8 percent), San Francisco, San Mateo, and Santa Cruz (all at 15 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
First Quarter 2018

C.A.R. Region	Housing Affordability Index	Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
Calif. Single-family home	31	$ 538,640	$ 2,790	$ 111,500
Calif. Condo/Townhome	39	$ 449,720	$ 2,330	$ 93,090
Los Angeles Metropolitan Area	32	$ 500,000	$ 2,590	$ 103,500
Inland Empire	43	$ 350,000	$ 1,810	$ 72,450
San Francisco Bay Area	23	$ 900,000	$ 4,660	$ 186,300
United States	57	$ 245,500	$ 1,270	$ 50,820

San Francisco Bay Area
Alameda	22	$ 875,000	$ 4,530	$ 181,130
Contra-Costa (Central County)	36	$ 615,000	$ 3,180	$ 127,310
Marin	18	$ 1,360,000	$ 7,040	$ 281,520
Napa	28	$ 679,000	$ 3,510	$ 140,550
San Francisco	15	$ 1,610,000	$ 8,330	$ 333,270
San Mateo	15	$ 1,575,050	$ 8,150	$ 326,040
Santa Clara	17	$ 1,373,000	$ 7,110	$ 284,210
Solano	42	$ 430,000	$ 2,230	$ 89,010
Sonoma	21	$ 681,000	$ 3,520	$ 140,970
Southern California
Los Angeles	28	$ 545,540	$ 2,820	$ 112,930
Orange County	21	$ 810,000	$ 4,190	$ 167,670
Riverside County	39	$ 397,000	$ 2,050	$ 82,180
San Bernardino	52	$ 278,500	$ 1,440	$ 57,650
San Diego	26	$ 610,000	$ 3,160	$ 126,270
Ventura	31	$ 635,500	$ 3,290	$ 131,550
Central Coast
Monterey	23	$ 590,000	$ 3,050	$ 122,130
San Luis Obispo	25	$ 596,400	$ 3,090	$ 123,460
Santa Barbara	22	$ 675,000	$ 3,490	$ 139,730
Santa Cruz	15	$ 850,000	$ 4,400	$ 175,950
Central Valley
Fresno	49	$ 258,000	$ 1,340	$ 53,410
Kern (Bakersfield)	56	$ 231,500	$ 1,200	$ 47,920
Kings County	52	$ 232,000	$ 1,200	$ 48,020
Madera	50	$ 255,000	$ 1,320	$ 52,790
Merced	43	$ 262,500	$ 1,360	$ 54,340
Placer County	44	$ 465,000	$ 2,410	$ 96,260
Sacramento	44	$ 355,000	$ 1,840	$ 73,490
San Benito	32	$ 560,000	$ 2,900	$ 115,920
San Joaquin	40	$ 362,500	$ 1,880	$ 75,040
Stanislaus	48	$ 300,000	$ 1,550	$ 62,100
Tulare	50	$ 225,000	$ 1,160	$ 46,580
Other Calif. Counties
Amador	45	$ 330,750	$ 1,710	$ 68,470
Butte	41	$ 307,000	$ 1,590	$ 63,550
Calaveras	46	$ 315,000	$ 1,630	$ 65,210
El Dorado	42	$ 489,000	$ 2,530	$ 101,220
Humboldt	36	$ 300,050	$ 1,550	$ 62,110
Lake County	40	$ 266,450	$ 1,380	$ 55,160
Lassen	68	$ 171,000	$ 880	$ 35,400
Mariposa	44	$ 292,500	$ 1,510	$ 60,550
Mendocino	25	$ 412,500	$ 2,130	$ 85,390
Mono	8	$ 780,000	$ 4,040	$ 161,460
Nevada	37	$ 400,000	$ 2,070	$ 82,800
Plumas	NA	$ NA	$ NA	$ NA
Shasta	49	$ 249,900	$ 1,290	$ 51,730
Siskiyou	48	$ 210,000	$ 1,090	$ 43,470
Sutter	49	$ 282,700	$ 1,460	$ 58,520
Tehama	51	$ 219,000	$ 1,130	$ 45,330
Tuolumne	49	$ 280,000	$ 1,450	$ 57,960
Yolo	41	$ 400,000	$ 2,070	$ 82,800
Yuba	49	$ 269,950	$ 1,400	$ 55,880


NA = Not available

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
First Quarter 2018

STATE/REGION/COUNTY	Q1 2018	Q4 2017		Q1 2017
Calif. Single-family home	31	29		32
Calif. Condo/Townhome	39	38	r	40
Los Angeles Metropolitan Area	32	31		33
Inland Empire	43	43		44	r
San Francisco Bay Area	23	21		25
United States	57	56		57

San Francisco Bay Area
Alameda	22	20		21
Contra-Costa (Central County)	36	34		37
Marin	18	18		18
Napa	28	25		24
San Francisco	15	12		13
San Mateo	15	14		15
Santa Clara	17	15		19
Solano	42	44		45
Sonoma	21	23		25
Southern California
Los Angeles	28	25		29
Orange County	21	21		21
Riverside County	39	38		39
San Bernardino	52	50		52
San Diego	26	26		28
Ventura	31	26		28	r
Central Coast
Monterey	23	21		23
San Luis Obispo	25	24		26
Santa Barbara	22	18		14
Santa Cruz	15	17		17
Central Valley
Fresno	49	46		48
Kern (Bakersfield)	56	54		55
Kings County	52	52		53
Madera	50	49	r	47
Merced	43	48		50
Placer County	44	44		45
Sacramento	44	43		46
San Benito	32	31		32
San Joaquin	40	41		45
Stanislaus	48	45		48
Tulare	50	52		52
Other Counties in California
Amador	45	44		47
Butte	41	39		41
Calaveras	46	50		NA
El Dorado	42	42		43
Humboldt	36	34		36
Lake County	40	36		43
Lassen	68	65		NA
Mariposa	44	48		46	r
Mendocino	25	28		26
Mono	8	19		NA
Nevada	37	39		NA
Plumas	NA	45		NA
Shasta	49	47		49
Siskiyou	48	51		48
Sutter	49	52		53
Tehama	51	56		55
Tuolumne	49	48		46	r
Yolo	41	34		37
Yuba	49	42		44