Higher home prices have put a dent in the state's housing affordability during the first quarter of 2013. According to the California Association of REALTORS® Traditional Housing Affordability Index (HAI), the percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California fell 44 percent in the first quarter of 2013. The index measures the percentage of all households that can afford to purchase a median-priced, single-family home in the state.
The first quarter index is down from 56 percent in first-quarter 2012. The index was 48 percent in fourth-quarter 2012.
California home buyers needed to earn a minimum annual income of $66,800 to qualify for the purchase of a $350,490 statewide median-priced, existing single-family home in the first quarter of 2013. 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 3.55 percent. The effective composite interest rate in first-quarter 2012 was 4.16 percent and 3.49 percent in the fourth quarter of 2012. The median home price was $279,190 in first-quarter 2012, and an annual income of $56,320 was needed to purchase a home at that price.
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in the San Francisco Bay Area dropped to 32 percent in the first quarter of 2013, down from 45 percent in first-quarter 2012 and from 34 percent in fourth-quarter 2012. In Santa Clara County, the affordability index dropped to 30 percent in first-quarter 2013, down from 42 percent in first-quarter 2012 and from 32 percent in fourth-quarter 2012.
Santa Clara County home buyers needed a minimum annual income of $134,370 to qualify for the purchase of a $750,000 median-priced, single-family home in the first quarter of 2013. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $3,360 assuming a 20 percent down payment and an effective composite interest rate of 3.55 percent.
"Silicon Valley has so many assets that it's not surprising many people want to live here," said Carolyn Miller, president of the Silicon Valley Association of REALTORS®. "There's the weather, of course, and more than that, we are a melting pot of diversity, with a great work force, exceptional educational institutions. We have an excellent location with access to highways, social and business services, arts and culture. We are in a good place and I think families know they derive great value living in our region."
All regions of the state experienced significant year-over-year declines in housing affordability, with Bay Area and Southern California counties recording the largest decreases in the index due to higher home prices. At an index of 77 percent, Madera County was the most affordable county of the state, while San Francisco and San Mateo counties tied for the least affordable at 23 percent.
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 email or call the SILVAR office at (408) 200-0100.