Slightly lower home prices and steady mortgage rates allowed more Californians to purchase a home in the fourth quarter of 2017, according to the California Association of Realtors' 2017 Housing Affordability report. The percentage of homebuyers who could afford to purchase a median-priced, single-family home in California in fourth-quarter 2017 edged up to 29 percent from 28 percent in third-quarter 2017, but was down from 31 percent in the fourth quarter a year ago.
According to C.A.R.'s Traditional Housing Affordability Index, this is the 19th consecutive quarter that the index fell below 40 percent. California's housing affordability index hit a peak of 56 percent in the first quarter of 2012.
A minimum annual income of $111,260 was needed to qualify for the purchase of a $550,990 statewide median-priced, single-family home in the fourth quarter of 2017. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan would be $2,780, assuming a 20 percent down payment and an interest rate of 4.17 percent.
Once again San Francisco (12 percent), San Mateo (14 percent), and Santa Clara (15 percent) counties were the least affordable areas in the state. In Santa Clara County, homebuyers needed a minimum annual income of $256,450 to qualify for the purchase of a $1,270,000 countywide median-priced, single-family home in fourth-quarter 2017. Their monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $6,410.
According to the 2018 Silicon Valley Index compiled by Joint Venture Silicon Valley, Silicon Valley incomes average about $131,000. It is still not enough to afford a median-priced home in the region.
"Due to our very low housing inventory, even high income earners are finding housing unaffordable," remarked Bill Moody, president of the Silicon Valley Association of Realtors. "When fewer than 15 percent of households can afford a home here, we have to get creative and think of ways to ease the housing shortage issue."
Moody said the California Association of Realtors is embarking on an effort to increase homeownership opportunities by seeking to qualify an initiative for the November 2018 ballot which will allow senior homeowners 55 years of age and older to keep all or most of their Proposition 13 property tax savings when they move.
"Seniors who are often on a fixed income are afraid they will not be able to afford a big property tax increase if they sell their existing home and buy another one, so they are discouraged from moving. As a result, almost three-quarters of homeowners 55 and older haven't moved since 2000," explained Moody.
Moody said C.A.R.'s initiative would allow senior homeowners to transfer their property tax base from their current residence to a replacement residence located anywhere in California. If approved by voters, the measure will let thousands of seniors, currently "locked into" their homes by low property tax rates, purchase a home that will better suit their needs while expanding the housing inventory for young families seeking to buy a 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 email or call the SILVAR office at (408) 200-0100.