Escalating home prices have pushed an affordability index tracked by the California Association of Realtors down to its lowest level in nearly five years. CAR’s Home Affordability Index measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. CAR 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.
The share of homebuyers who could afford to purchase a median-priced, existing single-family home in California fell to 36 percent in the second quarter according to CAR. This is the first time affordability fell below 40 percent since third-quarter 2008.
The fact that significantly higher home prices, particularly in the San Francisco Bay Area and coastal regions, shut out more homebuyers in the state during the second quarter of 2013 doesn’t come as a surprise to anyone in Lodi. Remarkably, Madera County was the most affordable areas for the state at 71 percent.
As of June, California’s median home price had posted monthly double-digit increases for a full year. The price is up 33.5 percent compared to June 2012!
Home buyers needed to earn a minimum annual income of $79,910 to qualify for the purchase of a $415,770 statewide median-priced, existing single-family home in the second quarter of 2013. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,000, assuming a 20 percent down payment and an effective composite interest rate of 3.64 percent.
Nearly all regions of the state experienced sharp quarter-over-quarter declines in housing affordability, with the Bay Area and coastal regions recording the greatest decreases in the index due to significantly higher home prices.
Leading the way in California real estate for more than 100 years, the California Association of Realtors (www.car.org) is one of the largest state trade organizations in the United States with 155,000 members dedicated to the advancement of professionalism in real estate.
Sheri Aguilar is the president of the Lodi Association of Realtors and can be reached at Sheri@YourLocalAOR.com