Despite the lowest interest rates in more than a year, fewer Californians were able to afford buying a home in the second quarter of 2019 compared to earlier in the year. When compared with the first quarter of 2019, housing affordability stayed at the same level in the second quarter in the high-priced Silicon Valley counties of San Mateo (18 percent) and Santa Clara (20 percent) and San Francisco (17 percent). Housing affordability improved in these counties when compared to second-quarter 2018.
According to the California Association of Realtors Traditional Housing Affordability Index, the percentage of homebuyers who could afford to purchase a median priced, single-family home statewide in second-quarter 2019 dipped to 30 percent from 32 percent in the first quarter of 2019 but was up from 26 percent in the second quarter a year ago. California's housing affordability index hit a peak of 56 percent in the second quarter of 2012.
A minimum annual income of $122,960 was needed to qualify for the purchase of a $608,660 statewide median priced, single-family home in the second quarter of 2019. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,070, assuming a 20 percent down payment and an interest rate of 4.17 percent. The interest rate was 4.62 percent in first-quarter 2019 and 4.70 percent in second-quarter 2018.
Compared with California, more than half of the nation's households (55 percent) could afford to purchase a $279,600 median-priced home. Buyers needed a minimum annual income of $56,480 to make monthly payments of $1,410.
In the San Francisco Bay Area, affordability improved from the second-quarter 2018 in every
county. "Home prices are starting to fall in line. Sellers are realizing they need to be realistic about pricing their home in this market. There is just so much buyers, especially first-time buyers, can afford, even with their high incomes and the low interest rates," said Alan Barbic, president of the Silicon Valley Association of Realtors.
San Francisco County was the least affordable, with just 17 percent of households able to purchase the $1,700,000 median-priced home. Forty-six percent of Solano County households could afford the $445,000 median-priced home, making it the most affordable Bay Area county.
San Francisco (17 percent) and San Mateo (18 percent) counties were the least affordable places in the Bay Area, and requiring the highest minimum qualifying incomes in the state. An annual income of $343,420 was needed to purchase a home in San Francisco County, and an annual income of $338,870 was required in San Mateo County.
In Santa Clara County, homebuyers needed an annual income of $268,680 to qualify for the purchase of a $1,330,000 countywide median-priced single-family home in the second quarter of 2019. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $6,720, assuming a 20 percent down payment and an interest rate of 4.17 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.