4th Qtr California Housing Affordability

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in fourth-quarter 2015 ticked up to 30 percent from the 29 percent recorded in the third quarter of 2015 but was down from 31 percent in fourth-quarter 2014, according to C.A.R.’s Traditional Housing Affordability Index (HAI). This is the 11th consecutive quarter that the index has been below 40 percent and is near the mid-2008 low level of 29 percent. California’s housing affordability index hit a peak of 56 percent in the first quarter of 2012.

C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. C.A.R. 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 home buyers in the state.

Home buyers needed to earn a minimum annual income of $96,640 to qualify for the purchase of a $483,050 statewide median-priced, existing single-family home in the fourth quarter of 2015. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,420, assuming a 20 percent down payment and an effective composite interest rate of 4.07 percent. The effective composite interest rate in third-quarter 2015 was 4.16 percent and 4.20 percent in the fourth quarter of 2014.

The median home price was $488,540 in third-quarter 2015, and an annual income of $98,580 was needed to purchase a home at that price.

Unchanged from the previous quarter and year, 39 percent of California households earned the minimum income to qualify for the purchase of a condominium or townhome in the last quarter of 2015. An annual income of $78,720 was required to make monthly payments of $1,970.