California housing affordability holds steady in third quarter as rising wages and...

California housing affordability holds steady in third quarter as rising wages and lower interest rates failed to improve purchasing power for home buyers

• 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.

LOS ANGELES – Nov. 10 – (RealEstateRama) — 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.

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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 compare 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)

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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.

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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
CA SFH  31  $           515,940  $               2,510  $           100,290
CA 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
S.F. Bay Area 25  $           785,980  $               3,820  $           152,780
US 57  $           240,900  $               1,170  $             46,830
         
S.F. 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  
CA SFH  31 31                           29  
CA Condo/Townhomes 40 40                           39  
Los Angeles Metropolitan Area 34 33                           31  
Inland Empire 46 46                           45  
S.F. Bay Area 25 23                           23  
US 57 57                           57  
           
S.F. 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  

r = revised

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Leading the way...® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) is one of the largest state trade organizations in the United States, with nearly 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Contact:

Los Angeles - Executive Office:
525 South Virgil Avenue
Los Angeles, CA 90020-1403
Phone: (213) 739-8200
Fax: (213) 480-7724

Media:

Mark Giberson
Phone: (213) 739-8304.

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