For release:

May 15, 2018

Strong wage growth and steady home prices buoy California housing affordability, C.A.R. reports

Twenty-eight regions see improvement from previous quarter,

with six of nine Bay Area counties posting higher

Thirty-one percent of California households could afford to purchase the $538,640 median-priced home in the first quarter of 2018, up from 29 percent in fourth-quarter 2017 but down from 32 percent a year ago.

A minimum annual income of $111,500 was needed to make monthly payments of $2,790, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.44 percent interest rate.

Thirty-nine percent of home buyers were able to purchase the $449,720 median-priced condo or townhome. An annual income of $93,090 was required to make a monthly payment of $2,330.

LOS ANGELES (May 15) – 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 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 first-quarter 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 C.A.R.’s 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 homebuyers 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 fourth-quarter 2017 was 4.17 percent and 4.36 percent in the first quarter of 2017.

Condominiums and townhomes also were more affordable in first-quarter 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.

Key points from the first-quarter 2018 Housing Affordability report include:

Housing affordability improved from fourth-quarter 2017 in 28 tracked counties and declined in 14 counties. Affordability in six counties was unchanged.

Strong wage growth in the San Francisco Bay Area pushed affordability higher from the previous quarter in six of nine Bay Area counties (Alameda, Contra Costa, Napa, San Francisco, San Mateo, and Santa Clara). Affordability decreased in two Bay Area counties (Solano and Sonoma) and held steady in Marin.

In Southern California, affordability improved in Los Angeles, Riverside, San Bernardino, and Ventura counties, while affordability in Orange and San Diego counties remained flat during first-quarter 2018.

In the Central Valley, six counties posted an increase in affordability from the previous quarter (Fresno, Kern, Madera, Sacramento, San Benito, and Stanislaus). Affordability in Merced, San Joaquin, and Tulare declined but held steady in Kings and Placer counties.

Affordability in the Central Coast improved moderately, driven by flat or declining home prices. Monterey, San Luis Obispo, and Santa Barbara experienced higher affordability, while Santa Cruz posted a decline as a result of subdued wage growth and price declines.

During the first quarter of 2018, the most affordable counties in California were Lassen (68 percent), Kern (56 percent), and Kings and San Bernardino (both at 52 percent).

Mono (8 percent), San Francisco, San Mateo, and Santa Cruz (all at 15 percent), counties were the least affordable areas in the state.

Housing Affordability slides (click link to open)



Affordability peak versus current

Annual required income peak vs. current

Monthly PITI peak versus current

Affordability by region peak versus current

Housing affordability by county

See C.A.R.’s historical housing affordability data.

See first-time buyer housing affordability data.





Leading the way…® in California real estate for more than 110 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than190,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

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CALIFORNIA ASSOCIATION OF REALTORS®

Traditional Housing Affordability Index

First Quarter 2018

C.A.R. Region Housing

Affordability Index Median Home

Price Monthly Payment Including Taxes & Insurance Minimum

Qualifying Income Calif. Single-family home 31 $ 538,640 $ 2,790 $ 111,500 Calif. Condo/Townhome 39 $ 449,720 $ 2,330 $ 93,090 Los Angeles Metropolitan Area 32 $ 500,000 $ 2,590 $ 103,500 Inland Empire 43 $ 350,000 $ 1,810 $ 72,450 San Francisco Bay Area 23 $ 900,000 $ 4,660 $ 186,300 United States 57 $ 245,500 $ 1,270 $ 50,820 San Francisco Bay Area Alameda 22 $ 875,000 $ 4,530 $ 181,130 Contra-Costa (Central County) 36 $ 615,000 $ 3,180 $ 127,310 Marin 18 $ 1,360,000 $ 7,040 $ 281,520 Napa 28 $ 679,000 $ 3,510 $ 140,550 San Francisco 15 $ 1,610,000 $ 8,330 $ 333,270 San Mateo 15 $ 1,575,050 $ 8,150 $ 326,040 Santa Clara 17 $ 1,373,000 $ 7,110 $ 284,210 Solano 42 $ 430,000 $ 2,230 $ 89,010 Sonoma 21 $ 681,000 $ 3,520 $ 140,970 Southern California Los Angeles 28 $ 545,540 $ 2,820 $ 112,930 Orange County 21 $ 810,000 $ 4,190 $ 167,670 Riverside County 39 $ 397,000 $ 2,050 $ 82,180 San Bernardino 52 $ 278,500 $ 1,440 $ 57,650 San Diego 26 $ 610,000 $ 3,160 $ 126,270 Ventura 31 $ 635,500 $ 3,290 $ 131,550 Central Coast Monterey 23 $ 590,000 $ 3,050 $ 122,130 San Luis Obispo 25 $ 596,400 $ 3,090 $ 123,460 Santa Barbara 22 $ 675,000 $ 3,490 $ 139,730 Santa Cruz 15 $ 850,000 $ 4,400 $ 175,950 Central Valley Fresno 49 $ 258,000 $ 1,340 $ 53,410 Kern (Bakersfield) 56 $ 231,500 $ 1,200 $ 47,920 Kings County 52 $ 232,000 $ 1,200 $ 48,020 Madera 50 $ 255,000 $ 1,320 $ 52,790 Merced 43 $ 262,500 $ 1,360 $ 54,340 Placer County 44 $ 465,000 $ 2,410 $ 96,260 Sacramento 44 $ 355,000 $ 1,840 $ 73,490 San Benito 32 $ 560,000 $ 2,900 $ 115,920 San Joaquin 40 $ 362,500 $ 1,880 $ 75,040 Stanislaus 48 $ 300,000 $ 1,550 $ 62,100 Tulare 50 $ 225,000 $ 1,160 $ 46,580 Other Calif. Counties Amador 45 $ 330,750 $ 1,710 $ 68,470 Butte 41 $ 307,000 $ 1,590 $ 63,550 Calaveras 46 $ 315,000 $ 1,630 $ 65,210 El Dorado 42 $ 489,000 $ 2,530 $ 101,220 Humboldt 36 $ 300,050 $ 1,550 $ 62,110 Lake County 40 $ 266,450 $ 1,380 $ 55,160 Lassen 68 $ 171,000 $ 880 $ 35,400 Mariposa 44 $ 292,500 $ 1,510 $ 60,550 Mendocino 25 $ 412,500 $ 2,130 $ 85,390 Mono 8 $ 780,000 $ 4,040 $ 161,460 Nevada 37 $ 400,000 $ 2,070 $ 82,800 Plumas NA $ NA $ NA $ NA Shasta 49 $ 249,900 $ 1,290 $ 51,730 Siskiyou 48 $ 210,000 $ 1,090 $ 43,470 Sutter 49 $ 282,700 $ 1,460 $ 58,520 Tehama 51 $ 219,000 $ 1,130 $ 45,330 Tuolumne 49 $ 280,000 $ 1,450 $ 57,960 Yolo 41 $ 400,000 $ 2,070 $ 82,800 Yuba 49 $ 269,950 $ 1,400 $ 55,880

NA = Not available





CALIFORNIA ASSOCIATION OF REALTORS®

Traditional Housing Affordability Index

First Quarter 2018

STATE/REGION/COUNTY Q1 2018 Q4 2017 Q1 2017 Calif. Single-family home 31 29 32 Calif. Condo/Townhome 39 38 r 40 Los Angeles Metropolitan Area 32 31 33 Inland Empire 43 43 44 r San Francisco Bay Area 23 21 25 United States 57 56 57 San Francisco Bay Area Alameda 22 20 21 Contra-Costa (Central County) 36 34 37 Marin 18 18 18 Napa 28 25 24 San Francisco 15 12 13 San Mateo 15 14 15 Santa Clara 17 15 19 Solano 42 44 45 Sonoma 21 23 25 Southern California Los Angeles 28 25 29 Orange County 21 21 21 Riverside County 39 38 39 San Bernardino 52 50 52 San Diego 26 26 28 Ventura 31 26 28 r Central Coast Monterey 23 21 23 San Luis Obispo 25 24 26 Santa Barbara 22 18 14 Santa Cruz 15 17 17 Central Valley Fresno 49 46 48 Kern (Bakersfield) 56 54 55 Kings County 52 52 53 Madera 50 49 r 47 Merced 43 48 50 Placer County 44 44 45 Sacramento 44 43 46 San Benito 32 31 32 San Joaquin 40 41 45 Stanislaus 48 45 48 Tulare 50 52 52 Other Counties in California Amador 45 44 47 Butte 41 39 41 Calaveras 46 50 NA El Dorado 42 42 43 Humboldt 36 34 36 Lake County 40 36 43 Lassen 68 65 NA Mariposa 44 48 46 r Mendocino 25 28 26 Mono 8 19 NA Nevada 37 39 NA Plumas NA 45 NA Shasta 49 47 49 Siskiyou 48 51 48 Sutter 49 52 53 Tehama 51 56 55 Tuolumne 49 48 46 r Yolo 41 34 37 Yuba 49 42 44

r = revised

NA = Not available