Real Estate

Higher home prices lower California housing affordability

By From page HS21 | May 17, 2013

California Association of Realtors

LOS ANGELES — Higher home prices put a dent in California’s housing affordability during the first quarter of 2013, the California Association of Realtors reported.

The percentage of homebuyers who could afford to purchase a median-priced, existing single-family home in California dropped to 44 percent in the first quarter of 2013, down from 56 percent in first-quarter 2012 and from 48 percent in fourth-quarter 2012, according to CAR’s Traditional Housing Affordability Index.

CAR’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. CAR also reports affordability indices for regions and select counties within the state. The index is considered the most fundamental measure of housing well-being for homebuyers in the state.

Homebuyers needed to earn a minimum annual income of $66,800 to qualify for the purchase of a $350,490 statewide median-priced, existing single-family home in the first quarter of 2013. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,670, assuming a 20 percent down payment and an effective composite interest rate of 3.55 percent. The effective composite interest rate in first-quarter 2012 was 4.16 percent and 3.49 percent in the fourth quarter of 2012.

The median home price was $279,190 in first-quarter 2012, and an annual income of $56,320 was needed to purchase a home at that price.

All regions of the state experienced significant year-over-year declines in housing affordability, with Bay Area and Southern California counties recording the largest decreases in the index due to higher home prices. At an index of 77 percent, Madera County was the most affordable county of the state, while San Francisco and San Mateo counties tied for the least affordable at 23 percent.

Press Release

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