More Californians could afford to purchase a home in the third quarter as flat home prices and stable interest rates combined to improve California housing affordability, according to the latest California Association of Realtors report.
According to the state Realtor group's Traditional Housing Affordability Index, 27 percent of California households could afford to purchase the $588,530 median-priced home in the third quarter of 2018, up from 26 percent in second-quarter 2018 and down from 28 percent a year ago.
Considered the most fundamental measure of housing well-being for home buyers in the state, the index has been below 30 percent for five of the past eight quarters. The housing affordability index hit a peak of 56 percent in the first quarter of 2012.
In third quarter 2018, Californians needed a minimum annual income of $125,540 to qualify for the purchase of a $588,530 statewide median-priced, existing single-family home. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,140, assuming a 20 percent down payment and an interest rate of 4.77 percent.
A minimum annual income of $125,540 was needed to make monthly payments of $3,140, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.77 percent interest rate.
Compared with California, more than half of the nation's households (53 percent) could afford to purchase a $266,900 median-priced home, which required a minimum annual income of $56,930 to make monthly payments of $1,420.
In the San Francisco Bay Area, affordability improved from a year ago in San Francisco and Marin counties, primarily due to higher wages. Affordability fell in six counties (Alameda, Contra Costa, Napa, San Mateo, Solano, and Sonoma). Affordability held steady in Santa Clara County.
In Santa Clara County, 17 percent of households could afford to purchase a median pried home in the 3rd quarter, up from 16 percent in the second quarter and the same percentage as a year ago. Homebuyers needed a minimum annual income of $277,310 to qualify for the purchase of a $1,300,000 median-priced home in the county. Their monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $6,930, assuming a 20 percent down payment.
In contrast, 14 percent of households in San Mateo County could afford a median priced home in the third quarter, no change from the second quarter and down from third-quarter 2017. San Mateo County homebuyers needed a minimum annual income of $341,300 to qualify for the purchase of a $1,600,000 median-priced home. Their monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $8,530, assuming a 20 percent down payment.
During the third quarter of 2018, the most affordable counties in California were Lassen (67 percent), Kern and Kings (51 percent), Tehama (49 percent) and Yuba (48 percent). Mono (11 percent), Santa Cruz (12 percent), San Mateo (14 percent), San Francisco (15 percent), and Santa Clara (17 percent) counties were the least affordable areas in the state.
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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