As the economy improves, it has become much harder to buy a home in California. The California Association of REALTORS® (C.A.R.) reports housing affordability in the fourth quarter of 2014 improved slightly from the previous quarter, but was down compared to fourth-quarter 2013.
According to C.A.R.'s Traditional Housing Affordability Index (HAI), 31 percent of California home buyers who could afford to purchase a median-priced, existing single-family home in California in fourth-quarter 2014, a slight increase from 30 percent in the third quarter of 2014, but down from 32 percent in fourth quarter of 2013.
Home buyers needed to earn a minimum annual income of $91,550 to qualify for the purchase of a $452,140 statewide median-priced, existing single-family home in the fourth quarter of 2014. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,290, assuming a 20 percent down payment and a composite interest rate of 4.2 percent. Home buyers needed to earn an annual income of $94,880 to qualify for the purchase of a $467,280 median priced home in third-quarter 2014.
Nineteen regions saw some improvement in housing affordability from the previous quarter due to price declines. The five most affordable counties were Kings (64 percent), San Bernardino (57 percent), Tulare (56 percent), Madera (56 percent), Merced (53 percent), and Fresno (53 percent). The least affordable counties were San Francisco (14 percent), San Mateo (15 percent), Marin (15 percent), and Santa Cruz (17 percent) as least affordable.
"The housing market has made such a strong comeback that even lower interest rates have failed to offset higher home prices," said Chris Isaacson, president of the Silicon Valley Association of REALTORS®. "California does not have an adequate housing supply, especially in the San Francisco Bay Area. Housing affordability has always be a challenge in Silicon Valley."
Twenty-two percent of Santa Clara County home buyers could afford to buy a median priced existing single-family home in fourth-quarter 2014, compared with 21 percent in the previous quarter and 23 percent in Q4 2013. Santa Clara County home buyers needed to earn a minimum annual income of $173,130 to qualify for the purchase of an $855,000 countywide median-priced, single-family home in the fourth quarter of 2014. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $4,330.
According to C.A.R., California's housing affordability index peaked at 56 percent in the first quarter of 2012. During that same quarter in 2012, housing affordability in Santa Clara County was at 42 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.