The California Association of Realtors reports the state's housing affordability in the second quarter of 2022 fell below 20% to the lowest level in nearly 15 years. Compared to the previous quarter, housing affordability declined in all but two of 51 California counties.
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 California in second-quarter 2022 slid to 16% from 24% in the first quarter of 2022 and down from 23% in the second quarter of 2021. California's housing affordability index peaked at 56% in the first quarter of 2012.
California homebuyers needed a minimum annual income of $199,200 to qualify for the purchase of a $883,370 statewide median-priced single-family home in the second quarter of 2022. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $4,980, assuming a 20% down payment and an interest rate of 5.39%.
The interest rate was 3.97% in first-quarter 2022 and 3.20% in second-quarter 2021. The average 30-year fixed-rate mortgage hit the highest level in more than 13 years in June as the Federal Reserve continued to raise rates aggressively in the second quarter.
"Record high home prices and interest hikes have crushed housing affordability for homebuyers across the state. Home prices soared in April and May and interest rates jumped to levels not seen in more than 13 years," said Brett Caviness, president of the Silicon Valley Association of Realtors.
San Mateo County required the highest minimum qualifying income to buy a median-priced home, surpassing the $500,000 benchmark for the first time to a record high of $512,000. Three other counties requiring a minimum qualifying income of over $400,000 in second-quarter 2022 were San Francisco ($450,800), Marin ($434,800) and Santa Clara ($428,400).
In San Mateo County, housing affordability in the second quarter of 2022 fell to 15% from 20% in first-quarter 2022 and 17% in second-quarter 2021. A minimum annual income of $512,000 was needed to qualify for the purchase of a $2,270,000 countywide median-priced, single-family home. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan would be $12,800.
In Santa Clara County, housing affordability fell to 18% from 20% in first-quarter 2022 and 21% in second-quarter 2021. A minimum annual income of $428,400 was needed to qualify for the purchase of a $1,900,000 countywide median-priced, single-family home. The monthly payment would be $10,710.
"Demand has waned due to the rise in mortgage rates, and there has been an increase in inventory. These factors help homebuyers who were discouraged by stiff competition last year to search for a home they can afford. Despite higher rates and home prices, homeowners still find homeownership a means of building long-term wealth," said Caviness.
For the state as a whole, Lassen (54%) remained the most affordable county in California in the second quarter of 2022, followed by Kings (39%), Glenn (36%) and Shasta (36%). Lassen County also required the lowest minimum qualifying income ($58,800) of all counties in California to purchase a median-priced home.
Meanwhile, Mono (6%), Santa Barbara (10%), San Luis Obispo (12%) and Orange (12%) were the least affordable counties in California. Each of these counties required at least a minimum income of $202,800 to purchase a median-priced home in the county.
Nationwide housing affordability also plunged in second-quarter 2022. Compared with California, nearly four in 10 (38%) of the nation's households could afford to purchase a $413,500 median-priced home, which required a minimum annual income of $93,200 to make monthly payments of $2,330. Nationwide affordability was 49% a year ago.
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.