The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in fourth-quarter 2019 was unchanged from the third quarter of 2019 at 31% but was up from 28% in the fourth quarter a year ago, according to the California Association of Realtor’s Traditional Housing Affordability Index (HAI).
California’s housing affordability index hit a peak of 56% in the fourth quarter of 2012.
A minimum annual income of $119,600 was needed to qualify for the purchase of a $607,040 statewide median-priced, existing single-family home in the fourth quarter of 2019. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,990, assuming a 20% down payment and an effective composite interest rate of 3.89%.
The effective composite interest rate was 3.85% in third-quarter 2019 and 4.95% a year ago. Housing affordability for condominiums and townhomes also improved from a year ago but decreased compared to the third quarter of 2019 because of higher median condominium prices. 41% of California households earned the minimum income to qualify for the purchase of a $480,000 median-priced condominium/townhome, down from 43% in the previous quarter. An annual income of $94,400 was required to make monthly payments of $2,360. 37% of households could afford to buy a condominium/townhome a year ago.
Compared with California, more than half of the nation’s households (57%) could afford to purchase a $274,900 median-priced home, which required a minimum annual income of $54,000 to make monthly payments of $1,350. Key points from the fourth-quarter 2019 Housing Affordability report include:
- When compared to a year ago, housing affordability improved in 44 tracked counties and declined in four counties. Affordability remained flat in one county.
- In the San Francisco Bay Area, affordability improved from fourth-quarter 2018 in every county. San Francisco County was the least affordable, with just 18% of households able to purchase the $1,600,000 median-priced home. Forty-seven% of Solano County households could afford the $460,000 median-priced home, making it the most affordable Bay Area county.
- Affordability also improved in all Southern California regions, with Orange County being the least affordable (26%) and San Bernardino County being the most affordable (51%).
- All counties in the Central Valley region experienced an increase in affordability from a year ago. San Benito County (34%) was the least affordable and Kings County (55%) was the most affordable.
- Housing affordability improved in three of four counties in the Central Coast region with Santa Cruz experiencing the biggest improvement in affordability — jumping to 21% in fourth-quarter 2019 from 12% a year ago. Santa Barbara County was the only county in the region with a year-over-year decline in affordability, with the index dipping to 23% in fourth-quarter 2019 from 26% a year ago.
- During the fourth quarter of 2019, the most affordable counties in California were Lassen (63%), Kings (55%) and Tulare and Plumas (52%). The minimum annual income needed to qualify for a home in these counties was less than $54,000.
- San Francisco (18%), San Mateo (20%) and Santa Cruz (21%) counties were the least affordable areas in the state. San Francisco County required the highest minimum qualifying income in the entire state. An annual income of $314,800 was needed to purchase a home in San Francisco County.
- San Mateo County also required an annual income exceeding $300,000 to purchase a median-priced home.
