The percentage of homebuyers who could afford to purchase a median-priced, single-family home in California in second-quarter 2020 dipped to 33 percent from 35 percent in the first quarter of 2020, but was up from 30 percent in the second quarter a year ago, according to the California Association of Realtors 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.
A minimum annual income of $115,200 was needed to qualify for the purchase of a $610,850 statewide median-priced, existing single-family home in the second quarter of 2020. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,880, assuming a 20 percent down payment and an interest rate of 3.43 percent. The interest rate was 3.70 percent in first-quarter 2020 and 4.17 percent in second-quarter 2019.
In the San Francisco Bay Area, affordability improved from second-quarter 2019 in every county, except Solano, which was unchanged. San Mateo and San Francisco counties were the least affordable, tied at 19 percent of households able to purchase a median-priced home. San Mateo County homebuyers needed a minimum qualifying income of over $320,000 to purchase a $1,700,000 median-priced home in second-quarter 2020, which would mean monthly mortgage payments of $8,010. Not far ahead was San Francisco County, which required the highest income of all counties in California at $322,000 for the purchase of a $1,710,000 median-priced home and monthly payments of $8,050.
Santa Clara County's housing affordability index remained at 22 percent, no change from Q2 of 2019. Homebuyers in the county needed a minimum annual income of $260,00 to qualify for the purchase of a $1,380,000 county median-priced single-family home and monthly payments of $6,500.
"It's been tough for homebuyers, especially first-time homebuyers, to purchase a home amid the coronavirus pandemic which has caused an economic recession and loss of jobs. The high demand for homes due to a serious housing shortage has caused home prices to continue rising," said Mary Kay Groth, president of the Silicon Valley Association of Realtors. "Higher priced properties purchased by buyers less impacted by the recession are currently making up a larger share of our local housing market."
During the second quarter of 2020, the most affordable counties in the state were Lassen (68 percent), Kings (60 percent), San Bernardino (54 percent), Siskiyou (54 percent), Tehama (54 percent), and Tuolumne (54 percent). The minimum qualifying income was $61,200 or less for each of these counties. Mono was the least affordable county in the state, where only 17 percent of the population could afford a $718,750 median-priced home in second-quarter 2020.
Compared with California, more than half of the nation's households (57 percent) could afford to purchase a $291,300 median-priced home, which required a minimum annual income of $54,800 to make monthly payments of $1,370. According to the state Realtor group, California's housing affordability index hit a peak of 56 percent in the second quarter of 2012.
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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