2nd Qtr 2015 Housing Affordability report

For release:
August 11, 2015

Growth in spring home prices leads to sizable drop in California housing affordability, C.A.R. reports
Every region except Kings County posts lower affordability compared to previous quarter.

• Thirty percent of California households could afford to purchase the $485,100 median-priced home in the second quarter, down from 34 percent in first-quarter 2015 and unchanged from 30 percent in second quarter 2014.

• A minimum annual income of $95,980 was needed to make monthly payments of $2,400, including principal, interest, and taxes on a 30-year fixed-rate mortgage at 3.95 percent interest rate.

• Thirty-nine percent of home buyers were able to purchase the $388,250 median-priced condo or townhome. An annual income of $76,820 was required to make a monthly payment of $1,920.

LOS ANGELES (Aug. 11) – A sharp increase in spring housing demand elevated home prices to levels last seen in late 2007 and reduced California’s housing affordability considerably in the second quarter, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today. The second-quarter 2015 drop in housing affordability follows two straight quarters of improvements for the state.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in second-quarter 2015 fell to 30 percent from the 34 percent recorded in the first quarter of 2015 and flat from the 30 percent in the second quarter a year ago, according to C.A.R.’s Traditional Housing Affordability Index (HAI). 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.

Home buyers needed to earn a minimum annual income of $95,980 to qualify for the purchase of a $485,100 statewide median-priced, existing single-family home in the second quarter of 2015. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,400, assuming a 20 percent down payment and an effective composite interest rate of 3.95 percent.

The median home price was $441,610 in first-quarter 2015, and an annual income of $87,540 was needed to purchase a home at that price. The effective composite interest rate in second-quarter 2015 was 3.97 percent.

Key points from the second-quarter 2015 Housing Affordability report include:

• Condominiums and townhomes were more affordable than single-family homes, with 39 percent of home buyers able to purchase the $388,250 median-priced condo or townhome. An annual income of $76,820 was required to make a monthly payment of $1,920.

• Compared to the previous quarter, housing affordability declined in every region except Kings County, which held steady, primarily driven by growth in spring home prices.
• Compared to the previous year, housing affordability improved in five regions (Marin, Orange, Monterey, San Luis Obispo, and Santa Cruz) and held steady in four regions (Alameda, Santa Clara, Los Angeles, and Placer).

• The remaining 19 regions (Contra Costa, Napa, San Francisco, San Mateo, Solano, Sonoma, Riverside, San Bernardino, San Diego, Ventura, Santa Barbara, Fresno, Kings, Madera, Merced, Sacramento, San Joaquin, Stanislaus, and Tulare) saw declines in housing affordability from the previous year.

• In the Bay Area, Marin, San Luis Obispo, and Santa Cruz counties posted the largest year-to-year improvement in affordability mainly due to growth in annual household income and lower interest rates. San Luis Obispo and Santa Cruz, in particular, experienced a large increase in incomes relative to price changes. Tech workers may have migrated to Santa Cruz due to its affordability and relative proximity to San Jose and Bay Area.

Housing Affordability slides (click link to open)

Affordability peak versus current
Annual income peak versus current
PITI peak versus current

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index

C.A.R. Region Housing
Affordability Index
Median Home
Price
Monthly Payment Including Taxes & Insurance Minimum
Qualifying Income
CA SFH (SAAR) 30  $           485,100  $               2,400  $             95,980
CA Condo/Townhomes 39  $           388,250  $               1,920  $             76,820
Los Angeles Metropolitan Area 32  $           440,620  $               2,180  $             87,180
Inland Empire 46  $           291,730  $               1,440  $             57,720
S.F. Bay Area 20  $           841,560  $               4,160  $           166,500
US 57  $           229,400  $               1,130  $             45,390
S.F. Bay Area        
Alameda 18  $           812,810  $               4,020  $           160,820
Contra-Costa (Central County) 18  $           836,020  $               4,140  $           165,410
Marin 17  $       1,169,900  $               5,790  $           231,470
Napa 23  $           623,970  $               3,090  $           123,450
San Francisco 10  $       1,353,450  $               6,690  $           267,780
San Mateo 13  $       1,300,000  $               6,430  $           257,210
Santa Clara 19  $           980,000  $               4,850  $           193,890
Solano 46  $           352,850  $               1,750  $             69,810
Sonoma 25  $           566,980  $               2,800  $           112,180
Southern California
Los Angeles 30  $           445,190  $               2,200  $             88,080
Orange County 21  $           713,220  $               3,530  $           141,110
Riverside County 40  $           334,580  $               1,650  $             66,200
San Bernardino 56  $           223,830  $               1,110  $             44,290
San Diego 25  $           547,840  $               2,710  $           108,390
Ventura 25  $           619,060  $               3,060  $           122,480
Central Coast
Monterey 27  $           480,000  $               2,370  $             94,970
San Luis Obispo 28  $           518,550  $               2,560  $           102,600
Santa Barbara 16  $           741,570  $               3,670  $           146,720
Santa Cruz 20  $           727,250  $               3,600  $           143,890
Central Valley
Fresno 50  $           219,030  $               1,080  $             43,340
Kings County 62  $           186,330  $                   920  $             36,870
Madera 50  $           216,430  $               1,070  $             42,820
Merced 55  $           205,060  $               1,010  $             40,570
Placer County 44  $           399,680  $               1,980  $             79,080
Sacramento 47  $           291,030  $               1,440  $             57,580
San Joaquin 37  $           285,810  $               1,410  $             56,550
Stanislaus 41  $           246,480  $               1,220  $             48,770
Tulare 54  $           190,740  $                   940  $             37,740

CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index

STATE/REGION/COUNTY Q2 2015 Q1 2015   Q2 2014  
CA SFH (SAAR) 30 34 30
CA Condo/Townhomes 39 41 38
Los Angeles Metropolitan Area 32 35 33
Inland Empire 46 47 47
S.F. Bay Area 20 23 20
US 57 61 57
S.F. Bay Area          
Alameda 18 23 18
Contra-Costa (Central County) 18 21 19
Marin 17 19 14
Napa 23 34 25
San Francisco 10 12 10
San Mateo 13 14 14
Santa Clara 19 22 19
Solano 46 48 50
Sonoma 25 31 29
Southern California          
Los Angeles 30 31 30
Orange County 21 22 20
Riverside County 40 42 41
San Bernardino 56 58 58
San Diego 25 28 26
Ventura 25 28 28
Central Coast          
Monterey 27 29 26
San Luis Obispo 28 30 23
Santa Barbara 16 18 18
Santa Cruz 20 22 18
Central Valley          
Fresno 50 51 53
Kings County 62 62 64
Madera 50 51 55 r
Merced 55 60 57
Placer County 44 46 44
Sacramento 47 49 48
San Joaquin 37 39 40
Stanislaus 41 43 45
Tulare 54 57 56

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 more than 175,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.