California housing affordability falls in Q1, with percentage of homebuyers who could afford median-priced, existing single-family home falling to 33% from 44% in year-ago period; percentage was 32% was Q4 2013: CAR
May 13, 2014
– All counties in California realized a double-digit year-over-year decline in affordability
A combination of continued price increases and relatively higher interest rates during the first quarter of 2014 led to decreased housing affordability in all regions of the state, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported.
While the percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California rose slightly from 32 percent in the fourth quarter of 2013 to 33 percent in the first quarter of 2014, affordability declined sharply from the 44 percent rate reported in the first quarter of 2013, according to C.A.R.’s Traditional Housing Affordability Index (HAI).
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 $86,419 to qualify for the purchase of a $416,720 statewide median-priced, existing single-family home in the first quarter of 2014. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,160, assuming a 20 percent down payment and an effective composite interest rate of 4.46 percent. The effective composite interest rate in fourth-quarter 2013 was 4.43 percent and 3.56 percent in the first quarter of 2013.
The median home price was $431,540 in fourth quarter 2013, and an annual income of $89,247 was needed to purchase a home at that price.
Highlights from the fourth quarter HAI include:
Slides (click to open)
Affordability peak versus current*
Annual income peak versus current*
PITI peak versus current*
*County data available by request
Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 165,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.