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. 9) – 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.
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)
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.
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
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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