A highly competitive market fueled by low interest rates and a tight supply of homes for sale continued to push the state's median home price upward to nearly 34 percent higher than a year ago. Higher home prices further depressed housing affordability for California in the second quarter of 2021.
According to C.A.R.'s Traditional Housing Affordability Index, the percentage of homebuyers who could afford to purchase a median-priced, single-family home in the state in second-quarter 2021 dropped to 23 percent from 27 percent in the first quarter of 2021 and from 33 percent in the second quarter of 2020. The second-quarter 2021 figure is less than half of the affordability index peak of 56 percent in the second quarter of 2012.
A minimum annual income of $150,800 was needed to qualify for the purchase of a $817,950 statewide median-priced, single-family home in the second quarter of 2021. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,770, assuming a 20 percent down payment and an interest rate of 3.20 percent.
Housing affordability for condominiums and townhomes also declined in second-quarter 2021 compared to a year ago, with 37 percent of California households earning the minimum income to qualify for the purchase of a $585,000 median-priced condominium/townhome, down from 40 percent during the previous quarter and from 44 percent in second-quarter 2020. An annual income of $108,000 was required to make monthly payments of $2,700.
Compared to the previous year, housing affordability declined in all counties but San Francisco County, which held even at 19 percent from a year ago. San Mateo County was the least affordable, with just 17 percent of households able to purchase the $2,117,500 median-priced home. San Mateo remained on top of all counties in terms of minimum qualifying income, with the figure reaching $390,400 in the second quarter of 2021. It was one of four counties in California (all in the Bay Area) that required a minimum qualifying income of more than $300,000 in second-quarter 2021.
In Santa Clara County, 21 percent of households were able to purchase a $1,699,500 median-priced home in the second quarter of this year, down slightly from 22 percent in first-quarter 2021 and Q2 of 2020. To qualify, homebuyers needed to earn minimum annual income of $313,200. Their monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $7,830, assuming a 20 percent down payment and an interest rate of 3.20 percent.
During the second quarter of 2021, Lassen (62 percent) remained the most affordable county in California, followed by Kings (56 percent) and Kern, Tulare, Shasta and Glenn (all at 45 percent). The minimum required qualifying income was less than $66,400 for each of these counties. Lassen also had the lowest minimum qualifying income in the state to purchase a median-priced home at $46,000.
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.