The California Association of Realtors (CAR) says high wages and lower seasonal home prices are contributing to more affordable homes compared to last quarter. However, compared to last year’s numbers, CAR says affordability remained flat.
According to CAR’s Traditional Housing Affordability Index (HAI), 34 percent of buyers could afford to purchase a median-priced, single-family home in California in the first quarter of this year, compared to 30 percent in the last quarter of 2015.
On a more localized perspective, 22 out of 29 counties saw an improvement in housing affordability, three saw a decline and four remained the same.
Some of the biggest changes were in the Bay Area, where eight out of nine counties became more affordable for buyers in the first quarter. Every county in Southern California, including Los Angeles, San Diego and Ventura counties, boosted in affordability.
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Income-to-housing in California
In order to purchase a median-priced, single-family home valued at $465,280 in California, buyers needed an annual income of at least $92,571. Assuming a 30-year fixed rate mortgage with 20 percent down and an interest rate of 4.01 percent, buyers faced monthly mortgage payments of $2,314. Last quarter, the interest rate was at 4.07 percent, up from 3.97 percent last year.
The median home price is down from last quarter’s $483,810. The annual income necessary to afford the median price home has also dropped from a previous $96,790 last quarter.
Golden State real estate highs and lows
While the percentage of buyers remained unchanged from 2015 boosted slightly overall from last quarter, this is the 12th consecutive quarter the affordability index was under 40 percent. Additionally, levels are close to mid-2008, when just 29 percent of buyers could afford homes. In the first quarter of 2012, affordability reached 56 percent of all California home buyers.
Compared with 39 percent last quarter, 41 percent of California households could qualify for a condo or townhome in the first quarter of 2016. The minimum annual income required was $77,575, with housing payments (assuming the aforementioned mortgage layout) of $1,939 per month.
Most/least reasonable counties in California
The top five most affordable counties in California were Kings (58 percent affordability) San Bernardino (57 percent affordability), Merced (55 percent affordability) and Kern (55 percent affordability) counties.
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The least affordable counties in the first quarter were San Francisco (13 percent), San Mateo (16 percent) and Santa Cruz (18 percent) counties.
