As California Home Prices Rise in Q3, Housing Affordability Index Begins to Decline
According to the California Association of Realtors, (C.A.R.), rising California home prices are now negatively impacting the State's housing affordability index during the third quarter of 2012.
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California fell to 49 percent in the third quarter of 2012, down from 51 percent in second-quarter 2012 and from 51 percent in third-quarter 2011, according to C.A.R.'s Traditional Housing Affordability Index (HAI).
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 $65,810 to qualify for the purchase of a $339,860 statewide median-priced, existing single-family home in the third quarter of 2012. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,650, assuming a 20 percent down payment and an effective composite interest rate of 3.72 percent. The effective composite interest rate in second-quarter 2012 was 3.92 percent and 4.63 percent in the third quarter of 2011.
Every Southern California county experienced lower affordability than the previous quarter because of higher home prices, while affordability improved or was stable in most San Francisco Bay Area counties.
At an index of 77 percent, San Bernardino County and Solano counties were the most affordable counties of the state. Conversely, San Mateo County was the least affordable, with only 24 percent of households able to purchase the county's median-priced home.