The California Association of REALTORS® (C.A.R.) reported this week that housing affordability in California during the third quarter of 2012 declined due to rising home prices in many parts of the state.
According to C.A.R.'s Traditional Housing Affordability Index, which measures the percentage of all households that can afford to purchase a median-priced, single-family home in California, 49 percent of California home buyers could afford to buy a median-priced, existing single-family home in the third quarter of this year, down from 51 percent in the second quarter and in third-quarter 2011.
Home buyers needed a minimum annual income of $65,810 to qualify for the purchase of a $339,860 statewide median-priced, existing single-family home in the third quarter. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,650, assuming a 20 percent down payment and composite interest rate of 3.72 percent.
Thirty-two percent of home buyers in Santa Clara County could afford to buy a median-priced single-family home, unchanged from second-quarter 2012, but down from 34 percent in third-quarter 2011. Santa Clara County home buyers needed a minimum annual income of $130,130 to qualify for the purchase of a $672,000 median-priced home. The monthly payment on a 30-year fixed-rate loan for a typical home buyer, including taxes and insurance, would amount to $3,250.
"We are starting to see the effects of the low inventory impacting prices and affordability. Demand for homes, even rental housing, is exceeding supply in many neighborhoods," said Suzanne Yost, president of the Silicon Valley Association of REALTORS®. "Our members are reporting an extremely large number of multiple offers, 40-50 in some cases. Inventory is down by as much as 50 percent in some areas."
The C.A.R. report states affordability improved or remained stable in most San Francisco Bay Area counties, but every county in Southern California experienced lower affordability than the previous quarter because of higher home prices. San Bernardino County and Solano counties were the most affordable counties of the state, with an index of 77 percent. San Mateo County was the least affordable, with only 24 percent of 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.
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