CALIFORNIA ASSOCIATION OF REALTORS Reports 2014 Second Quarter Housing Affordability Declines Statewide
- Last Updated: Thursday, 14 August 2014 05:28
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California fell from 33 percent in the first quarter of 2014 to 30 percent in second-quarter 2014 and was down from 36 percent in second-quarter 2013, according to C.A.R.’s Traditional Housing Affordability Index (HAI).
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 $93,590 to qualify for the purchase of a $457,140 statewide median-priced, existing single-family home in the second quarter of 2014. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,340, assuming a 20 percent down payment and an effective composite interest rate of 4.32 percent. The effective composite interest rate in first-quarter 2014 was 4.46 percent and 3.64 percent in the second quarter of 2012.
The median home price was $416,720 in first-quarter 2014, and an annual income of $86,420 was needed to purchase a home at that price.
Key points from the second quarter Housing Affordability report include:
• During the second quarter of 2014, the three most affordable counties in California were Kings (64 percent), San Bernardino (58 percent), and Merced (57 percent).
• The least affordable counties in California were San Francisco, San Mateo, and Marin (all at 14 percent).
• Only Monterey County experienced an improvement in housing affordability from the previous quarter, largely due to a lower median home price. Housing affordability in San Mateo, Sonoma, San Luis Obispo, Santa Barbara, Fresno, and Kings counties was unchanged quarter to quarter.
• Housing affordability has dropped 26 percent since first-quarter 2012, when housing peaked as the most affordable in California. • With home prices increasing at double-digit rates throughout 2013 and interest rates higher than levels observed in early 2013, both the monthly payment, including taxes and insurance (PITI), and minimum income required to purchase a home, shot up by more than 66 percent at the statewide level.
• The monthly PITI and minimum income required to purchase a home compared to the affordability peak increased the most in Santa Barbara County, followed by Alameda and San Mateo counties.
• The monthly PITI and minimum income required increased the least in Kings, San Luis Obispo, and Santa Cruz counties, when compared to the peak.
• When compared to the peak, affordability in Monterey, Santa Barbara, Alameda, Solano, and Sacramento counties has declined the most.
• The five counties that have declined the least since the peak are Kings, San Francisco, Contra Costa, San Luis Obispo, and Marin.