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REALTOR®: California housing affordability lower due to higher home prices

Wednesday, February 27, 2013

Higher home prices reduced housing affordability in California during the fourth quarter of 2012, according to a report by the California Association of REALTORS®.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in the state decreased to 48 percent in fourth-quarter 2012, down from 49 percent in third-quarter 2012 and from 55 percent in fourth-quarter 2011, according to the state Realtor group's Traditional Housing Affordability Index (HAI).  The index is considered the most fundamental measure of housing well-being for home buyers in the state.

California home buyers needed to earn a minimum annual income of $66,940 to qualify for the purchase of a $353,190 statewide median-priced, existing single-family home in the fourth quarter of 2012. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,670, assuming a 20 percent down payment and an effective composite interest rate of 3.49 percent.

In the Bay Area, the affordability level has dropped from an index of 42 percent in fourth- quarter 2011 to 34 percent in the fourth-quarter 2012. In the nine-county region, Solano County was the most affordable at 73 percent. San Mateo and San Francisco counties were the least affordable at 24 percent and 22 percent, respectively.

Santa Clara County's affordability level dropped from 40 percent in fourth-quarter 2011 to 32 percent in fourth-quarter 2012. Santa Clara County home buyers needed to earn a minimum annual income of $129,820 to qualify for the purchase of a $685,000 median-priced single-family home in the fourth quarter of 2012. Their monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $3,250, assuming a 20 percent down payment and an effective composite interest rate of 3.49 percent.

"The Bay Area has experienced a housing recovery faster than most places in the state and the country. The job market has improved, as well. People are moving here for jobs and looking for places to live. The limited inventory of homes for sale in the Bay Area has contributed to the rise in home prices," explained Carolyn Miller, president of the Silicon Valley Association of REALTORS®.

According to the state REALTOR® group's data, housing affordability results were mixed at the regional level, with affordability improving from the third quarter of 2012 in the counties of Alameda, Contra Costa, Marin, Napa, Los Angeles, Ventura, San Luis Obispo, Santa Cruz, Fresno, and Kings counties. However, homes in San Francisco, Solano, Riverside, San Bernardino, Monterey, Santa Barbara, Madera, Sacramento, and Tulare counties were less affordable during fourth-quarter 2012.

At an index of 76 percent, San Bernardino and Kings counties were the most affordable counties of the state. San Francisco County was the least affordable with only 22 percent of the region's households able to purchase the county's median-priced home.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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