HIGHER INTEREST RATES LOWER CALIFORNIA HOUSING AFFORDABILITY IN THIRD QUARTER

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HIGHER INTEREST RATES LOWER CALIFORNIA HOUSING AFFORDABILITY IN THIRD QUARTER
Source: C.A.R.

Relatively flat home prices weren’t enough to ease housing affordability as higher interest rates reduced the number of Californians who could buy a home in the third quarter, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

Making sense of the storyIMG_2336

  • Twenty-nine percent of California households could afford to purchase the $487,420 median-priced home in the third quarter, down from 30 percent in second-quarter 2015 and unchanged from 29 percent in third quarter 2014.
  • A minimum annual income of $98,350 was needed to make monthly payments of $2,460, including principal, interest, and taxes on a 30-year, fixed-rate mortgage at 4.16 percent interest rate.
  • Thirty-eight percent of home buyers were able to purchase the $390,740 median-priced condo or townhome. An annual income of $78,840 was required to make a monthly payment of $1,970.
  • The median home price was $485,910 in second-quarter 2015, and an annual income of $96,140 was needed to purchase a home at that price. The effective composite interest rate in second-quarter 2015 was 3.95 percent.
  • Compared to the previous year, housing affordability declined in all regions except Marin, San Luis Obispo, Santa Barbara, and Santa Cruz, which improved, and held steady in five regions (Napa, Orange, Monterey, Merced, and Placer).
  • The remaining 19 regions (Alameda, Contra Costa, San Francisco, San Mateo, Santa Clara, Solano, Sonoma, Los Angeles, Riverside, San Bernardino, San Diego, Ventura, Fresno, Kings, Madera, Sacramento, San Joaquin, Stanislaus, and Tulare) saw declines in housing affordability from the previous year.
  • Other Bay Area counties, such as Santa Clara, Solano, and Sonoma, experienced significant affordability drops as home buyers looking for more affordable homes moved to outlying counties and drove home prices higher.

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