For release:

August 8, 2018

Higher home prices, rising interest rates depress California housing affordability



Housing affordability falls to 10-year lows, extending into traditionally more affordable regions

Twenty-six percent of California households could afford to purchase the $596,730 median-priced home in the second quarter of 2018, down from 31 percent in first-quarter 2018 and down from 29 percent a year ago.

A minimum annual income of $126,490 was needed to make monthly payments of $3,160, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 4.70 percent interest rate.

Thirty-six percent of home buyers were able to purchase the $477,790 median-priced condo or townhome. An annual income of $101,270 was required to make a monthly payment of $2,530.

LOS ANGELES (Aug. 8) – Record home price increases and higher interest rates combined to constrain California housing affordability to the lowest levels in 10 years, 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 second-quarter 2018 fell to 26 percent from 31 percent in the first quarter of 2018 and was down from 29 percent in the second quarter a year ago, according to C.A.R.’s Traditional Housing Affordability Index (HAI). This is the 21st consecutive quarter that the index has been below 40 percent. California’s housing affordability index hit a peak of 56 percent in the second 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 $126,490 was needed to qualify for the purchase of a $596,730 statewide median-priced, existing single-family home in the second quarter of 2018. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,160, assuming a 20 percent down payment and an effective composite interest rate of 4.70 percent. The effective composite interest rate in first-quarter 2018 was 4.44 percent and 4.09 percent in the second quarter of 2017.

While low housing affordability may be typical in many Bay Area counties, more traditionally affordable areas were at 10-year lows in the second quarter. Those that reached the decade-low include Alameda, Merced, Orange, Riverside, Sacramento, San Bernardino, San Diego, San Mateo, Santa Clara, Santa Cruz, and Sonoma.

Housing affordability for condominiums and townhomes also fell in second-quarter 2018 compared to the previous quarter with 36 percent of California households earning the minimum income to qualify for the purchase of a $477,790 median-priced condominium/townhome, down from 39 percent in the first quarter. An annual income of $101,270 was required to make monthly payments of $2,530.

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

Housing affordability improved from second-quarter 2017 in 8 tracked counties and declined in 37 counties. Affordability in four counties remained flat.

In the San Francisco Bay Area, affordability improved from a year ago in San Francisco and Marin counties, primarily due to higher wages. Affordability fell in five counties (Alameda, Contra Costa, Santa Clara, Solano, and Sonoma). Affordability held steady in Napa and San Mateo counties.

In Southern California, affordability improved only in Ventura, and dropped in five counties (Los Angeles, Orange, Riverside, San Bernardino, and San Diego) compared to a year ago.

In the Central Valley, only Madera County saw an improvement in affordability from second-quarter 2017. Housing affordability decreased from a year ago in nine counties (Kern, Kings, Merced, Placer, Sacramento, San Benito, San Joaquin, Stanislaus and Tulare). Affordability held steady only in Fresno County.

In the Central Coast region, only Santa Barbara experienced a year-to-year improvement in affordability, while three counties (Monterey, San Luis Obispo, and Santa Cruz) posted a decline.

During the second quarter of 2018, the most affordable counties in California were Lassen (64 percent), Kern (53 percent), Madera (52 percent), Tehama (51 percent) andKings (50 percent).

Santa Cruz (12 percent), San Francisco, San Mateo, and Mono (all at 14 percent), and Alameda and Santa Clara (both at 16 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

Second quarter 2018

STATE/REGION/COUNTY 2nd Qtr. 2018 Median Home Price Monthly Payment Including Taxes & Insurance Minimum Qualifying Income Calif. Single-family Home 26 $596,730 $3,160 $126,490 Calif. Condo/Townhome 36 $477,790 $2,530 $101,270 Los Angeles Metro Area 29 $530,000 $2,810 $112,340 Inland Empire 41 $360,000 $1,910 $76,310 San Francisco Bay Area 18 $1,035,000 $5,480 $219,380 United States 53 $269,000 $1,430 $57,020 San Francisco Bay Area Alameda 16 $1,000,000 $5,300 $211,960 Contra Costa 29 $695,000 $3,680 $147,320 Marin 18 $1,400,000 $7,420 $296,750 Napa 25 $707,250 $3,750 $149,910 San Francisco 14 $1,625,000 $8,610 $344,440 San Mateo 14 $1,650,000 $8,740 $349,740 Santa Clara 16 $1,405,000 $7,450 $297,810 Solano 38 $450,000 $2,380 $95,380 Sonoma 20 $695,000 $3,680 $147,320 Southern California Los Angeles 26 $557,220 $2,950 $118,110 Orange 20 $830,000 $4,400 $175,930 Riverside 37 $405,000 $2,150 $85,850 San Bernardino 49 $290,000 $1,540 $61,470 San Diego 23 $645,000 $3,420 $136,720 Ventura 28 $670,000 $3,550 $142,020 Central Coast Monterey 19 $647,000 $3,430 $137,140 San Luis Obispo 22 $618,500 $3,280 $131,100 Santa Barbara 20 $695,000 $3,680 $147,320 Santa Cruz 12 $905,000 $4,800 $191,830 Central Valley Fresno 47 $268,390 $1,420 $56,890 Kern 53 $244,000 $1,290 $51,720 Kings 50 $235,000 $1,250 $49,810 Madera 52 $238,000 $1,260 $50,450 Merced 42 $265,000 $1,400 $56,170 Placer 41 $495,900 $2,630 $105,110 Sacramento 41 $374,000 $1,980 $79,270 San Benito 30 $571,000 $3,030 $121,030 San Joaquin 38 $373,380 $1,980 $79,140 Stanislaus 45 $315,000 $1,670 $66,770 Tulare 48 $233,000 $1,230 $49,390 Other Calif. Counties Amador 44 $335,000 $1,780 $71,010 Butte 38 $320,000 $1,700 $67,830 Calaveras 43 $329,000 $1,740 $69,740 El Dorado 38 $525,000 $2,780 $111,280 Humboldt 33 $315,000 $1,670 $66,770 Lake County 37 $283,000 $1,500 $59,990 Lassen 64 $192,500 $1,020 $40,800 Mariposa 39 $320,000 $1,700 $67,830 Mendocino 22 $430,000 $2,280 $91,140 Mono 14 $624,500 $3,310 $132,370 Nevada 32 $435,000 $2,310 $92,200 Plumas 42 $297,000 $1,570 $62,950 Shasta 46 $265,500 $1,410 $56,280 Siskiyou 48 $207,500 $1,100 $43,980 Sutter 45 $299,950 $1,590 $63,580 Tehama 51 $215,900 $1,140 $45,760 Tuolumne 43 $308,500 $1,630 $65,390 Yolo 33 $469,500 $2,490 $99,520 Yuba 45 $290,000 $1,540 $61,470





CALIFORNIA ASSOCIATION OF REALTORS®

Traditional Housing Affordability Index

Second quarter 2018

STATE/REGION/COUNTY 2nd Qtr. 2018 1st Qtr. 2018 2nd Qtr. 2017 Calif. Single-family home 26 31 29 Calif. Condo/Townhome 36 39 38 Los Angeles Metro Area 29 32 31 Inland Empire 41 43 43 San Francisco Bay Area 18 23 21 United States 53 57 55 San Francisco Bay Area Alameda 16 22 19 Contra Costa 29 36 31 Marin 18 18 17 Napa 25 28 25 San Francisco 14 15 12 San Mateo 14 15 14 Santa Clara 16 17 17 Solano 38 42 44 Sonoma 20 21 25 Southern California Los Angeles 26 28 28 Orange 20 21 21 Riverside 37 39 39 San Bernardino 49 52 51 San Diego 23 26 26 Ventura 28 31 27 Central Coast Monterey 19 23 21 San Luis Obispo 22 25 26 Santa Barbara 20 22 16 Santa Cruz 12 15 17 Central Valley Fresno 47 49 47 Kern 53 56 54 Kings 50 52 52 Madera 52 50 44 Merced 42 43 48 Placer 41 44 43 Sacramento 41 44 45 San Benito 30 32 33 San Joaquin 38 40 43 Stanislaus 45 48 47 Tulare 48 50 52 Other Calif. Counties Amador 44 45 42 Butte 38 41 39 Calaveras 43 46 49 El Dorado 38 42 40 Humboldt 33 36 36 Lake County 37 40 38 Lassen 64 68 64 Mariposa 39 44 50 r Mendocino 22 25 27 Mono 14 8 25 Nevada 32 37 39 Plumas 42 47 47 Shasta 46 49 47 Siskiyou 48 48 47 Sutter 45 49 53 Tehama 51 51 57 Tuolumne 43 49 46 Yolo 33 41 35 Yuba 45 49 43

r = revised