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Higher housing prices and tight inventory drag down California housing affordability; income required to buy doubles in five years, C.A.R. reports

LOS ANGELES, Aug. 9, 2017 /PRNewswire-USNewswire/ -- Higher home prices resulting from a severe lack of homes for sale and high demand during the hot home-buying season eroded California's housing affordability in the second quarter, 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 second-quarter 2017 fell to 29 percent, down from 32 percent in the first quarter of 2017 and down from 31 percent in the second quarter a year ago, according to C.A.R.'s Traditional Housing Affordability Index (HAI). This is the 17th consecutive quarter that the index has been below 40 percent and the lowest since third-quarter 2015. 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 home buyers in the state.

A minimum annual income of $110,890 was needed to qualify for the purchase of a $553,260 statewide median-priced, existing single-family home in the second quarter of 2017. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,770, assuming a 20 percent down payment and an effective composite interest rate of 4.09 percent. The effective composite interest rate in first-quarter 2017 was 4.36 percent and 3.85 percent in the second quarter of 2016.

Home prices have nearly doubled since affordability reached its highest level five years ago, and compared to then, home buyers now need twice the income to purchase a median-priced home. In the first quarter of 2012, buyers statewide needed a minimum annual income of $56,320 to purchase a home that was priced $279,190. And in the San Francisco Bay Area, a home buyer needed a minimum annual income of $90,370 to purchase a $447,970 priced home just five years ago. Compare that to the current minimum income of $179,390 needed to purchase an $895,000 priced home now.

Condominiums and townhomes also were less affordable in second-quarter 2017 compared to the previous quarter. Thirty-eight percent of California households earned the minimum income to qualify for the purchase of a $443,400 median-priced condominium/townhome in the second quarter of 2017, and an annual income of $88,870 was required to make monthly payments of $2,220. Forty percent of households could afford to purchase the $414,840 priced condo or townhome in first-quarter 2017.

Key points from the second-quarter 2017 Housing Affordability report include:

Compared to affordability in first-quarter 2017, only six of 43 counties tracked posted an improvement in housing affordability (Napa, Santa Barbara, San Benito, Mariposa/Tuolumne, Mendocino, and Sutter), 29 experienced a decline (Alameda, Contra Costa, Marin, San Francisco, San Mateo, Santa Clara, Solano, Los Angeles, San Bernardino, San Diego, Ventura, Monterey, Fresno, Kern, Kings, Madera, Merced, Placer, Sacramento, San Joaquin, Stanislaus, Amador, Butte, El Dorado, Lake, Mendocino, Shasta, Yolo, Yuba), and eight were unchanged (Sonoma, Orange, Riverside, San Luis Obispo, Santa Cruz, Tulare, Humboldt, and Sutter).
During the second quarter of 2017, the most affordable counties in California were Tehama (57 percent), Kern (54 percent), Sutter, (53 percent), Kings and Tulare (both at 52 percent).
San Francisco (12 percent), San Mateo (14 percent), and Santa Barbara (16 percent), Santa Clara and Santa Cruz (both at 17 percent) counties were the least affordable areas in the state.
Housing affordability figures are now available for the following counties: Amador, Butte, El Dorado, Humboldt, Lake, Mariposa and Tuolumne (combined), Mendocino, San Benito, Shasta, Siskiyou, Sutter, Tehama, Yolo, and Yuba. See accompanying tables.

Housing Affordability slides (click link to open)

Affordability peak versus current
Annual required income peak vs. current
PITI peak versus current
Median home price peak vs. current
CA housing affordability by quarter (2006-2017)
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 Second Quarter 2017

C.A.R. Region	Housing Affordability Index	Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
Calif. Single-family home	29	$ 553,260	$ 2,770	$ 110,890
Calif. Condo/Townhome	38	$ 443,400	$ 2,220	$ 88,870
Los Angeles Metro Area	31	$ 491,250	$ 2,460	$ 98,470
Inland Empire	43	$ 342,050	$ 1,710	$ 68,560
San Francisco Bay Area	21	$ 895,000	$ 4,480	$ 179,390

San Francisco Bay Area
Alameda	19	$ 880,000	$ 4,410	$ 176,390
Contra-Costa (Central Cty)	31	$ 655,000	$ 3,280	$ 131,290
Marin	17	$ 1,302,500	$ 6,530	$ 261,070
Napa	25	$ 683,000	$ 3,420	$ 136,900
San Francisco	12	$ 1,450,000	$ 7,270	$ 290,630
San Mateo	14	$ 1,469,000	$ 7,360	$ 294,440
Santa Clara	17	$ 1,183,440	$ 5,930	$ 237,210
Solano	44	$ 412,000	$ 2,060	$ 82,580
Sonoma	25	$ 625,000	$ 3,130	$ 125,270
Southern California
Los Angeles	28	$ 514,220	$ 2,580	$ 103,070
Orange County	21	$ 788,000	$ 3,950	$ 157,950
Riverside County	39	$ 380,000	$ 1,900	$ 76,170
San Bernardino	51	$ 269,640	$ 1,350	$ 54,050
San Diego	26	$ 605,000	$ 3,030	$ 121,260
Ventura	27	$ 635,000	$ 3,180	$ 127,280
Central Coast
Monterey	21	$ 603,000	$ 3,020	$ 120,860
San Luis Obispo	26	$ 565,000	$ 2,830	$ 113,250
Santa Barbara	16	$ 750,000	$ 3,760	$ 150,330
Santa Cruz	17	$ 850,000	$ 4,260	$ 170,370
Central Valley
Fresno	47	$ 250,000	$ 1,250	$ 50,110
Kern (Bakersfield)	54	$ 232,500	$ 1,170	$ 46,600
Kings County	52	$ 225,000	$ 1,130	$ 45,100
Madera	44	$ 259,900	$ 1,300	$ 52,090
Merced	48	$ 248,000	$ 1,240	$ 49,710
Placer County	43	$ 465,000	$ 2,330	$ 93,200
Sacramento	45	$ 340,000	$ 1,700	$ 68,150
San Benito	33	$ 530,000	$ 2,660	$ 106,230
San Joaquin	43	$ 336,940	$ 1,690	$ 67,540
Stanislaus	47	$ 288,500	$ 1,450	$ 57,830
Tulare	52	$ 220,000	$ 1,100	$ 44,100
Other Calif. Counties
Amador	42	$ 340,000	$ 1,700	$ 68,150
Butte County	39	$ 305,850	$ 1,530	$ 61,300
El Dorado County	40	$ 480,000	$ 2,410	$ 96,210
Humboldt	36	$ 299,000	$ 1,500	$ 59,930
Lake County	38	$ 250,000	$ 1,250	$ 50,110
Mariposa And Tuolumne	46	$ 284,390	$ 1,430	$ 57,000
Mendocino	27	$ 400,000	$ 2,000	$ 80,180
Shasta	47	$ 259,900	$ 1,300	$ 52,090
Siskiyou County	47	$ 216,500	$ 1,080	$ 43,390
Sutter	53	$ 271,000	$ 1,360	$ 54,320
Tehama	57	$ 202,000	$ 1,010	$ 40,490
Yolo	35	$ 430,000	$ 2,150	$ 86,190
Yuba	43	$ 270,000	$ 1,350	$ 54,120

r = revised

CALIFORNIA ASSOCIATION OF REALTORS® Traditional Housing Affordability Index Second Quarter 2017

STATE/REGION/COUNTY	2Qtr 2017	1Qtr 2017		2Qtr 2016
Calif. Single-family home	29	32		31
Calif. Condo/Townhome	38	40		40
Los Angeles Metropolitan Area	31	33		33
Inland Empire	43	43		46
San Francisco Bay Area	21	25		23	r

San Francisco Bay Area
Alameda	19	21		23	r
Contra-Costa (Central County)	31	37		35	r
Marin	17	18		18
Napa	25	24		26
San Francisco	12	13		13
San Mateo	14	15		14
Santa Clara	17	19		19
Solano	44	45		45
Sonoma	25	25		26
Southern California
Los Angeles	28	29		30
Orange County	21	21		22
Riverside County	39	39		41
San Bernardino	51	52		56
San Diego	26	28		28	r
Ventura	27	28	r	33	r
Central Coast
Monterey	21	23		25
San Luis Obispo	26	26		27
Santa Barbara	16	14		19	r
Santa Cruz	17	17		17
Central Valley
Fresno	47	48		48	r
Kern (Bakersfield)	54	55		55	r
Kings County	52	53		54	r
Madera	44	47		51	r
Merced	48	50		51	r
Placer County	43	45		47	r
Sacramento	45	46		46	r
San Benito	33	32		36
San Joaquin	43	45		45
Stanislaus	47	48		48
Tulare	52	52		50
Other Counties in California
Amador	42	47		50
Butte County	39	41		43
El Dorado County	40	43		38
Humboldt	36	36		42	r
Lake County	38	43		44
Mariposa And Tuolumne	46	45		51
Mendocino	27	26		34	r
Shasta	47	49		48	r
Siskiyou County	47	48		54	r
Sutter	53	53		55	r
Tehama	57	55		60
Yolo	35	37		36	r
Yuba	43	44		47	r

r = revised

SOURCE CALIFORNIA ASSOCIATION OF REALTORS

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Higher housing prices and tight inventory drag down California housing affordability; income required to buy doubles in five years, C.A.R. reports

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