California's housing affordability rose to its highest level in fourth-quarter 2011, matching the record high level in 2009, due to lower home prices and record-low interest rates, according to this month's California Association of REALTORS® housing affordability report. Housing affordability also improved in Santa Clara County and in most counties in the San Francisco Bay Area.
According to C.A.R.'s Traditional Housing Affordability Index., 55 percent of home buyers who could afford to purchase a median-priced, existing single-family home in California in the fourth quarter of 2011, up from 52 percent in third-quarter 2011 and from 50 percent in the fourth quarter of 2010. The index was the highest since C.A.R. began tracking housing affordability levels in 1988, and equaled a high set in first-quarter 2009. C.A.R.'s housing affordability index is considered the most fundamental measure of housing well-being for home buyers in the state.
Home buyers needed to earn a minimum annual income of $57,750 to qualify for the purchase of a $282,350 statewide median-priced, existing single-family home in the fourth quarter of 2011. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,440, assuming a 20 percent down payment and an effective composite interest rate of 4.31 percent. The effective composite interest rate in third-quarter 2011 was 4.63 percent and 4.62 percent in the fourth quarter of 2010.
Housing affordability rose in most counties in the San Francisco Bay Area, except in San Francisco and San Mateo counties, where it was unchanged, primarily due to home price increases in those counties. In Santa Clara County, the index rose to 40 percent in the fourth quarter of 2011, up from 34 percent in the previous quarter and 35 percent in the fourth quarter of 2010.
Santa Clara County home buyers needed to earn a minimum qualifying annual income of $112,300 to purchase a $549,000 median-priced, existing single-family home in the fourth quarter of 2011. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,810, assuming a 20 percent down payment and an effective composite interest rate of 4.31 percent.
"The economy in our region is slowly improving," said Suzanne Yost, president of the Silicon Valley Association of REALTORS®. "We are experiencing an historic period of exceptionally low interest rates and favorable home prices, opening up more opportunities for potential home buyers."
Yost indicated interest rates have continued their downward trend. The average rate on a 30-year fixed rate loan has dropped to 3.87 percent. Rates have averaged below 4 percent for the past three months. Additionally, C.A.R.'s newly released January sales and price report shows the median price of an existing single-family home in Santa Clara County dipped to $495,000 in January, making home prices more favorable to buyers.
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.
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