Higher home prices fueled by the shortage of homes for sale continue to negatively impact California's housing affordability. According to the latest California Association of Realtors housing affordability report, the state's housing affordability index in the first quarter of 2021 saw an 8 percentage-point annual decline, keeping it at the lowest level since mid-2018. Housing affordability held even on an annual basis in San Francisco and Santa Clara counties and declined in 49 counties.
The percentage of homebuyers who could afford to purchase a median-priced, single-family home in California in first-quarter 2021 dropped to 27 percent from 35 percent in first-quarter 2020 and was unchanged from the fourth quarter of 2020, according to C.A.R.'s Traditional Housing Affordability Index. The first-quarter 2021 figure is less than half of the affordability index peak of 56 percent in the first quarter of 2012.
A minimum annual income of $131,200 was needed to qualify for the purchase of a $720,490 statewide median-priced, single-family home in the first quarter of 2021. The monthly payment, including taxes and insurance, on a 30-year fixed-rate loan would be $3,280, assuming a 20 percent down payment and an interest rate of 3.08 percent.
In the San Francisco Bay Area, affordability declined from a year ago in every county except San Francisco and Santa Clara counties, which held even at 20 percent and 22 percent, respectively. Homebuyers in Santa Clara County needed a minimum annual income of $272,200 to qualify for the purchase of a $1.5 million countywide median-priced single-family home. The monthly payment, including taxes and insurance, on a 30-year fixed-rate loan would be $6,830, assuming a 20 percent down payment and an interest rate of 3.08 percent.
San Mateo County was the least affordable county in the state, with just 19 percent of households able to purchase a $1,850,000 median-priced home at the highest minimum qualifying annual income of $337,200 in the first quarter of 2021. It was the only county in California that had a minimum qualifying annual income of over $300,000 in first-quarter 2021.
"We have a housing affordability crisis in our state, especially in Silicon Valley where only those earning high six-figure salaries and the wealthy can afford to buy a median-priced home. We need to take care of our teachers, our frontline health care workers and service workers whose salaries are not even half of the qualifying income," said Joanne Fraser, president of the Silicon Valley Association of Realtors.
C.A.R. just released its April sales and market data which revealed April's statewide median home price hit $813,980, up 7.2 percent from March and up 34.2 percent from April 2020. The median price increase diminishes housing affordability even more, said Fraser. "The reason home prices have increased so much is because the state has not been building enough homes. This is a crisis that is growing to major proportions and the state must do something now."
Compared with California more than half of the nation's households (54 percent) could afford to purchase a $319,200 median-priced home. The required minimum annual income in first-quarter 2021 was $58,000 to make monthly payments of $1,450.
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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