REAL ESTATE TOPICS...California housing affordability edges up from third quarter; slips from year ago

Sixteen regions see improvements, with Contra Costa, Los Angeles, Alameda, Sonoma, and San Joaquin counties leading the way

LOS ANGELES (Feb. 11) – Lower interest rates and level home prices combined to perk up California housing affordability in the fourth quarter of 2015, compared to the previous quarter, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. Affordability, however, was down when compared to the previous year.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in fourth-quarter 2015 ticked up to 30 percent from the 29 percent recorded in the third quarter of 2015 but was down from 31 percent in fourth-quarter 2014, according to C.A.R.’s Traditional Housing Affordability Index (HAI).  This is the 11th 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 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.

Home buyers needed to earn a minimum annual income of $96,640 to qualify for the purchase of a $483,050 statewide median-priced, existing single-family home in the fourth quarter of 2015.  The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,420, assuming a 20 percent down payment and an effective composite interest rate of 4.07 percent.  The effective composite interest rate in third-quarter 2015 was 4.16 percent and 4.20 percent in the fourth quarter of 2014. 

The median home price was $488,540 in third-quarter 2015, and an annual income of $98,580 was needed to purchase a home at that price.

Unchanged from the previous quarter and year, 39 percent of California households earned the minimum income to qualify for the purchase of a condominium or townhome in the last quarter of 2015. An annual income of $78,720 was required to make monthly payments of $1,970.

Key points from the fourth-quarter 2015 Housing Affordability report include:

• Compared to affordability in third-quarter 2015, 16 counties saw an improvement in housing affordability, five experienced declines, and six were unchanged.
• Regionally, affordability improved slightly across the state with affordability gains mostly in the higher-priced areas, while less expensive regions experienced minimal effects due to level home prices.
• Alameda, Contra Costa, Sonoma, Los Angeles, and San Joaquin counties saw the greatest quarter-to-quarter improvement in housing affordability due to flat home prices and lower interest rates.
• During the fourth quarter of 2015, the five most affordable counties in California were Kings (61 percent), Merced (55 percent), San Bernardino (53 percent), Tulare (54 percent), and Fresno (49 percent).
• San Francisco (11 percent), San Mateo (14 percent), and Marin (17 percent), counties were the least affordable areas of the state.  

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index

C.A.R. Region	Housing Affordability Index	Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
CA SFH (SAAR)	30	$           483,050	$               2,420	$             96,640
CA Condo/Townhomes	39	$           393,470	$               1,970	$             78,720
Los Angeles Metropolitan Area	32	$           442,830	$               2,210	$             88,600
Inland Empire	45	$           295,550	$               1,480	$             59,130
S.F. Bay Area	24	$           735,170	$               3,680	$           147,080
United States	58	$           222,700	$               1,110	$             44,550
S.F. Bay Area
Alameda	22	$           728,160	$               3,640	$           145,680
Contra-Costa (Central County)	37	$           526,550	$               2,630	$           105,350
Marin	17	$       1,171,340	$               5,860	$           234,350
Napa	21	$           655,940	$               3,280	$           131,230
San Francisco	11	$       1,270,110	$               6,350	$           254,110
San Mateo	14	$       1,195,000	$               5,980	$           239,080
Santa Clara	20	$           940,000	$               4,700	$           188,060
Solano	45	$           355,900	$               1,780	$             71,200
Sonoma	26	$           551,340	$               2,760	$           110,300
Southern California
Los Angeles	27	$           481,940	$               2,410	$             96,420
Orange County	21	$           708,700	$               3,540	$           141,790
Riverside County	39	$           340,260	$               1,700	$             68,070
San Bernardino	53	$           233,730	$               1,170	$             46,760
San Diego	25	$           546,770	$               2,730	$           109,390
Ventura	26	$           608,430	$               3,040	$           121,730
Central Coast
Monterey	25	$           500,950	$               2,510	$           100,220
San Luis Obispo	26	$           541,990	$               2,710	$           108,430
Santa Barbara	23	$           607,880	$               3,040	$           121,620
Santa Cruz	21	$           720,000	$               3,600	$           144,050
Central Valley
Fresno	49	$           219,960	$               1,100	$             44,010
Kings County	61	$           190,970	$                   960	$             38,210
Madera	48	$           220,830	$               1,100	$             44,180
Merced	55	$           205,190	$               1,030	$             41,050
Placer County	44	$           394,770	$               1,970	$             78,980
Sacramento	46	$           294,050	$               1,470	$             58,830
San Joaquin	38	$           284,820	$               1,420	$             56,980
Stanislaus	40	$           253,320	$               1,270	$             50,680
Tulare	54	$           189,300	$                   950	$             37,870

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index

STATE/REGION/COUNTY	Q4 2015	Q3 2015		Q4 2014
CA SFH (SAAR)	30	29		31
CA Condo/Townhomes	39	39	R	39
Los Angeles Metropolitan Area	32	31		34
Inland Empire	45	45		47
S.F. Bay Area	24	22	R	21
United  States	58	56		59
S.F. Bay Area
Alameda	22	20		20
Contra-Costa	37	34	R	40	R
Marin	17	19		15
Napa	21	21		24
San Francisco	11	10		11	R
San Mateo	14	13		15
Santa Clara	20	19		22
Solano	45	44		50
Sonoma	26	24		29
Southern California
Los Angeles	27	24		28
Orange County	21	20		21
Riverside County	39	39		41
San Bernardino	53	54		57
San Diego	25	24		27
Ventura	26	25		29
Central Coast
Monterey	25	27		27
San Luis Obispo	26	27		26
Santa Barbara	23	18		21
Santa Cruz	21	19		17
Central Valley
Fresno	49	49		53
Kings County	61	60		64
Madera	48	49		50	R
Merced	55	55		53
Placer County	44	44		45
Sacramento	46	46		49
San Joaquin	38	36		41	R
Stanislaus	40	40		44	R
Tulare	54	53		56

r = revised