C.A.R. reports 3rd Qtr housing affordability

November 7, 2014

Housing affordability in California holds steady in third quarter but improves in Bay Area

LOS ANGELES (Nov. 7) – Lower interest rates and minimal home price gains kept California’s housing affordability in check in the third quarter of 2014 and even helped improve affordability in some high-cost counties in the San Francisco Bay region, 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 third-quarter 2014 was unchanged from the 30 percent recorded in the second quarter of 2014 but was down from a revised 32 percent in third-quarter 2013, according to C.A.R.’s Traditional Housing Affordability Index (HAI).  This is the sixth consecutive quarter that the index was below 40 percent.

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 $94,960 to qualify for the purchase of a $467,700 statewide median-priced, existing single-family home in the third quarter of 2014.  The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,370, assuming a 20 percent down payment and an effective composite interest rate of 4.23 percent.  The effective composite interest rate in second-quarter 2014 was 4.32 percent and 4.36 percent in the third quarter of 2013.

The median home price was $457,140 in second-quarter 2014, and an annual income of $93,590 was needed to purchase a home at that price.

Key points from the third quarter 2014 Housing Affordability report include:

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