Seasonal price declines and higher household income elevated California's housing affordability in first-quarter 2017, according to the California Association of Realtors. The San Francisco Bay Area counties continue to be the least affordable with only 13 percent of homebuyers able to purchase a median-priced home in San Francisco County; 15 percent in San Mateo County; and 19 percent in Santa Clara County.
The percentage of homebuyers who could afford to purchase a median-priced, existing single-family home in California in first-quarter 2017 inched up to 32 percent, up from 31 percent in the fourth quarter of 2016, but down from 34 percent in the first quarter a year ago, according to the C.A.R. Traditional Housing Affordability Index. The index measures the percentage of all households that can afford to purchase a median-priced, single-family home in California.
Homebuyers needed to earn a minimum annual income of $102,050 to qualify for the purchase of a $496,620 statewide median-priced single-family home in the first quarter of 2017. Their monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,550, assuming a 20 percent down payment and an effective composite interest rate of 4.36 percent.
Homes were less affordable in first-quarter 2017 compared to first-quarter 2016, when the affordability index stood at 34 and the median home price was $465,280. An annual income of $92,570 was needed to make monthly payments of $2,310.
Eight of 43 counties tracked posted an improvement in housing affordability from fourth quarter 2016 (Los Angeles, San Diego, Merced, San Joaquin, Tulare, El Dorado, Shasta, and Sutter); 26 experienced a decline (Alameda, Contra Costa, Marin, Napa, Santa Clara, Sonoma, Orange County, Riverside, San Bernardino, Ventura, Monterey, San Luis Obispo, Santa Barbara, Fresno, Kings, Madera, Placer, San Benito, Amador, Humboldt, Lake, Mariposa/Tuolumne, Mendocino, Siskiyou, Tehama, Yuba); and nine were unchanged (San Francisco, San Mateo, Santa Clara, Santa Cruz, Kern, Sacramento, Stanislaus, Butte, and Yolo).
Santa Clara County had a first-quarter 2017 index of 19 percent, down from 22 percent in both fourth-quarter 2016 and first-quarter 2016. Homebuyers needed an annual income of $219,870 to qualify for the purchase of a $1,070,000 median priced home in the first quarter of this year. The monthly payment, including taxes and insurance on a 30-year fixed rate loan would be $5,500 assuming a 20 down payment.
"The tight supply of homes in Santa Clara County is driving home prices so high that even buyers who meet the income requirements have to be willing to go higher in multiple offer situations. In some circumstances that can be risky," says Denise Welsh, president of the Silicon Valley Association of Realtors. "Buying a home is the biggest purchase a family will ever make. Having a concerned, but objective Realtor can help buyers stay focused on both the emotional and financial issues most important to them."
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.