A lower cost of borrowing and higher income levels allowed more Californians to afford a home purchase during the third quarter of 2019, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in third-quarter 2019 edged up to 31% from 30% in the second quarter of 2019 and up from 27% in the third quarter a year ago, according to C.A.R.'s Traditional Housing Affordability Index (HAI). California's housing affordability index hit a peak of 56% in the third 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.

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A minimum annual income of $120,400 was needed to qualify for the purchase of a $613,470 statewide median-priced, existing single-family home in the third quarter of 2019. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,010, assuming a 20% down payment and an effective composite interest rate of 3.85%, the lowest rate since third-quarter 2016. The effective composite interest rate was 4.17% in second-quarter 2019 and 4.77% a year ago.

Housing affordability for condominiums and townhomes also improved in the third quarter compared to the previous quarter, with 43% of California households earning the minimum income to qualify for the purchase of a $465,000 median-priced condominium/townhome, up from 40% in the previous quarter. An annual income of $91,200 was required to make monthly payments of $2,280. 36% of households could afford to buy a condominium/townhome a year ago.

Compared with California, more than half of the nation's households (56%) could afford to purchase a $280,020 median-priced home, which required a minimum annual income of $54,800 to make monthly payments of $1,370.

Key points from the third-quarter 2019 Housing Affordability report include:

  • When compared to a year ago, housing affordability improved in 42 tracked counties and declined in five counties. Affordability remained flat in one county.
  • In the San Francisco Bay Area, affordability improved from third-quarter 2018 in every county. San Francisco County was the least affordable, with just 18% of households able to purchase the $1,580,000 median-priced home. 47% 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 Los Angeles and Orange counties tied for being the least affordable (25%) and San Bernardino County being the most affordable (51%).
  • In the Central Valley region, only Kern County experienced a decline in affordability from a year ago, decreasing from 53% in third-quarter 2018 to 51% in third-quarter 2019. San Benito County (35%) was the least affordable and Kings County (55%) was the most affordable.
  • During the third quarter of 2019, the most affordable counties in California were Lassen (64%), Kings (55%) and Madera (52%). The minimum annual income needed to qualify for a home in these counties was less than $56,000.
  • Mono (17%), San Francisco (18%), and San Mateo (20%) counties were the least affordable areas in the state. San Francisco required the highest minimum qualifying income in the entire state. An annual income of $309,600 was needed to purchase a home in San Francisco County, though down from $343,240 in second-quarter 2019.