California Housing Affordability Inches up in First Quarter

Despite a moderate increase in mortgage interest rates, seasonal price declines and higher household income elevated California’s housing affordability in first-quarter 2017, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said this week.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in first-quarter 2017 inched up to 32 percent, up from 31 percent in the fourth quarter of 2016 but was down from 34 percent in the first quarter a year ago, according to C.A.R.’s Traditional Housing Affordability Index (HAI). This is the 16th 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 fourth 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 $102,050 to qualify for the purchase of a $496,620 statewide median-priced, existing single-family home in the first quarter of 2017. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,550, assuming a 20 percent down payment and an effective composite interest rate of 4.36 percent. The effective composite interest rate in fourth-quarter 2016 was 3.91 percent and 4.01 percent in the first quarter of 2016.

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