Higher wages and lower seasonal home prices combined to push California’s housing affordability higher in the first quarter of 2018, compared to the previous quarter, the Arcadia Association of Realtors said today.
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in the first-quarter of 2018 edged up to 31 percent from 29 percent in the fourth quarter of 2017, but was down from 32 percent in the first quarter a year ago, according to the California Association of Realtors’ (C.A.R) Traditional Housing Affordability Index (HAI). This is the 20th consecutive quarter that the index has been below 40 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.
A minimum annual income of $111,500 was needed to qualify for the purchase of a $538,640 statewide median-priced, existing single-family home in the first quarter of 2018. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,790, assuming a 20 percent down payment and an effective composite interest rate of 4.44 percent. The effective composite interest rate in the fourth-quarter of 2017 was 4.17 percent and 4.36 percent in the first quarter of 2017.
Condominiums and townhomes also were more affordable in the first-quarter of 2018 compared to the previous quarter, with 39 percent of California households earning the minimum income to qualify for the purchase of a $449,720 median-priced condominium/townhome, up from 38 percent in the fourth quarter. An annual income of $93,090 was required to make monthly payments of $2,330.