Strong seasonal home prices weaken housing affordability in second quarter
Minimum annual income required to purchase hits six digits for first time since Great Recession
• Thirty-one percent of California households could afford to purchase the $516,220 median-priced home in the second quarter, down from 34 percent in first-quarter 2016 and up from 30 percent in second-quarter 2015.
• A minimum annual income of $101,217 was needed to make monthly payments of $2,530, including principal, interest, and taxes on a 30-year fixed-rate mortgage at 3.85 percent interest rate.
• Forty percent of home buyers were able to purchase the $411,390 median-priced condo or townhome. An annual income of $80,663 was required to make a monthly payment of $2,017.
LOS ANGELES (Aug. 10) – Lower interest rates failed to offset strong seasonal price increases, making it harder for Californians to purchase a home in the second quarter of 2016, 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 2016 fell to 31 percent from the 34 percent recorded in the first quarter of 2016 and was up from 30 percent in second-quarter 2015, according to C.A.R.’s Traditional Housing Affordability Index (HAI). This is the 13th 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 $101,217 to qualify for the purchase of a $516,220 statewide median-priced, existing single-family home in the second quarter of 2016. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,530, assuming a 20 percent down payment and an effective composite interest rate of 3.85 percent. The effective composite interest rate in first-quarter 2016 was 4.01 percent and 3.95 percent in the second quarter of 2015.
Homes were slightly more affordable in second-quarter 2016 compared to a year ago, when the affordability index stood at 30 and the median home price was $488,500. An annual income of $96,650 was needed to make monthly payments of $2,420.
Condominiums and townhomes also were slightly less affordable than in the previous quarter. Forty percent of California households earned the minimum income to qualify for the purchase of a condominium or townhome in the second quarter of 2016, down from 41 percent in the first quarter of 2016. An annual income of 80,663 was required to make monthly payments of $2,017.
Key points from the second-quarter 2016 Housing Affordability report include:
• Compared to affordability in first-quarter 2016, 25 of 29 counties tracked saw a decrease in housing affordability, two experienced an improvement (Napa and San Luis Obispo), and two were unchanged (San Francisco and Madera).
• Seven of nine Bay Area counties recorded lower affordability numbers as did all six Southern California regions. Nine of 10 Central Valley counties and three of four Central Coast counties also saw lower affordability, compared to the previous quarter.
• During the second quarter of 2016, the most affordable counties in California were Kings (56 percent); San Bernardino (56 percent); Kern (54 percent); and Fresno, Madera, and Tulare all at 50 percent.
• San Francisco (13 percent), San Mateo (14 percent), and Santa Cruz (17 percent) counties were the least affordable areas of the state.
• During the second quarter of 2016, the most affordable counties in California were Kings (56 percent); San Bernardino (56 percent); Kern (54 percent); and Fresno, Madera, and Tulare all at 50 percent.
• San Francisco (13 percent), San Mateo (14 percent), and Santa Cruz (17 percent) counties were the least affordable areas of the state.
Housing Affordability slides (click link to open)
Affordability peak versus current
Annual required income peak vs. current
PITI peak versus current
Regional comparison (2006-2016)
Annual required income peak vs. current
PITI peak versus current
Regional comparison (2006-2016)
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 185,000 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 2016
| C.A.R. Region | Housing Affordability Index | Median Home Price | Monthly Payment Including Taxes & Insurance | Minimum Qualifying Income |
| CA SFH | 31 | $ 516,220 | $ 2,530 | $ 101,217 |
| CA Condo/Townhomes | 40 | $ 411,390 | $ 2,017 | $ 80,663 |
| Los Angeles Metropolitan Area | 33 | $ 470,330 | $ 2,305 | $ 92,219 |
| Inland Empire | 46 | $ 315,500 | $ 1,547 | $ 61,861 |
| S.F. Bay Area | 23 | $ 840,920 | $ 4,122 | $ 164,882 |
| US | 57 | $ 240,700 | $ 1,180 | $ 47,195 |
| S.F. Bay Area | ||||
| Alameda | 20 | $ 825,700 | $ 4,047 | $ 161,898 |
| Contra-Costa | 32 | $ 628,150 | $ 3,079 | $ 123,164 |
| Marin | 18 | $ 1,225,000 | $ 6,005 | $ 240,190 |
| Napa | 25 | $ 630,000 | $ 3,088 | $ 123,526 |
| San Francisco | 13 | $ 1,375,000 | $ 6,740 | $ 269,601 |
| San Mateo | 14 | $ 1,330,000 | $ 6,519 | $ 260,778 |
| Santa Clara | 19 | $ 1,085,000 | $ 5,318 | $ 212,740 |
| Solano | 45 | $ 386,000 | $ 1,892 | $ 75,684 |
| Sonoma | 26 | $ 585,000 | $ 2,868 | $ 114,703 |
| Southern California | ||||
| Los Angeles | 30 | $ 480,040 | $ 2,353 | $ 94,123 |
| Orange County | 22 | $ 742,220 | $ 3,638 | $ 145,530 |
| Riverside County | 41 | $ 355,320 | $ 1,742 | $ 69,669 |
| San Bernardino | 56 | $ 242,370 | $ 1,188 | $ 47,522 |
| San Diego | 26 | $ 589,910 | $ 2,892 | $ 115,666 |
| Ventura | 29 | $ 647,320 | $ 3,173 | $ 126,922 |
| Central Coast | ||||
| Monterey | 25 | $ 535,000 | $ 2,622 | $ 104,899 |
| San Luis Obispo | 27 | $ 546,620 | $ 2,679 | $ 107,178 |
| Santa Barbara | 20 | $ 703,460 | $ 3,448 | $ 137,930 |
| Santa Cruz | 17 | $ 799,000 | $ 3,917 | $ 156,663 |
| Central Valley | ||||
| Fresno | 50 | $ 235,020 | $ 1,152 | $ 46,081 |
| Kern (Bakersfield) | 54 | $ 228,950 | $ 1,122 | $ 44,891 |
| Kings County | 56 | $ 212,660 | $ 1,042 | $ 41,697 |
| Madera | 50 | $ 221,700 | $ 1,087 | $ 43,469 |
| Merced | 52 | $ 212,080 | $ 1,040 | $ 41,583 |
| Placer County | 46 | $ 438,490 | $ 2,149 | $ 85,976 |
| Sacramento | 45 | $ 323,710 | $ 1,587 | $ 63,471 |
| San Joaquin | 45 | $ 313,840 | $ 1,538 | $ 61,536 |
| Stanislaus | 48 | $ 271,940 | $ 1,333 | $ 53,320 |
| Tulare | 50 | $ 207,700 | $ 1,018 | $ 40,724 |
CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
Second quarter 2016
Traditional Housing Affordability Index
Second quarter 2016
| STATE/REGION/COUNTY | Q2 2016 | Q1 2016 | Q2 2015 | ||
| CA SFH | 31 | 34 | 30 | ||
| CA Condo/Townhomes | 40 | 41 | 39 | ||
| Los Angeles Metropolitan Area | 33 | 35 | 32 | ||
| Inland Empire | 46 | 48 | 46 | ||
| S.F. Bay Area | 23 | 27 | 23 | R | |
| US | 57 | 60 | 57 | ||
| S.F. Bay Area | |||||
| Alameda | 20 | 23 | 20 | R | |
| Contra-Costa | 32 | 38 | 34 | R | |
| Marin | 18 | 20 | 17 | ||
| Napa | 25 | 23 | R | 24 | R |
| San Francisco | 13 | 13 | 10 | ||
| San Mateo | 14 | 16 | 13 | ||
| Santa Clara | 19 | 22 | 19 | ||
| Solano | 45 | 48 | R | 46 | |
| Sonoma | 26 | 28 | R | 27 | R |
| Southern California | |||||
| Los Angeles | 30 | 31 | 30 | ||
| Orange County | 22 | 23 | 21 | ||
| Riverside County | 41 | 42 | 40 | ||
| San Bernardino | 56 | 57 | 56 | ||
| San Diego | 26 | 28 | 25 | ||
| Ventura | 29 | 30 | 25 | ||
| Central Coast | |||||
| Monterey | 25 | 27 | 27 | ||
| San Luis Obispo | 27 | 26 | 28 | ||
| Santa Barbara | 20 | 21 | 15 | R | |
| Santa Cruz | 17 | 18 | 20 | ||
| Central Valley | |||||
| Fresno | 50 | 52 | 50 | ||
| Kern (Bakersfield) | 54 | 55 | 54 | - | |
| Kings County | 56 | 58 | 62 | ||
| Madera | 50 | 50 | 50 | ||
| Merced | 52 | 55 | 55 | ||
| Placer County | 46 | 48 | 44 | ||
| Sacramento | 45 | 48 | 47 | ||
| San Joaquin | 45 | 47 | 37 | ||
| Stanislaus | 48 | 50 | 41 | ||
| Tulare | 50 | 52 | 54 |
R = revised
CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
Second quarter 2016
Traditional Housing Affordability Index
Second quarter 2016
