California housing affordability grows worse in third quarter
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Home prices may have steadied, but higher interest rates reduced the number of Californians who could buy a home in the third quarter, says the latest report from the California Association of Realtors.
The percentage of home buyers who could afford to purchase a $487,420 median-priced home slipped to 29 percent in the third quarter, from 30 percent in second-quarter 2015 and unchanged from 29 percent in third quarter 2014, according to C.A.R.’s Traditional Housing Affordability Index.
Home prices may have steadied, but higher interest rates reduced the number of Californians who could buy a home in the third quarter.
Home prices may have steadied, but higher interest rates reduced the number of… more
PHOTO BY SCOTT BRIDGES
California’s housing affordability index hit a peak of 56 percent in the third quarter of 2012.
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In the third quarter, home buyers needed to earn a minimum of $98,350 a year 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.
The median home price was $485,910 in second quarter, when an annual income of $96,140 was needed to purchase a home at that price. The effective composite interest rate in the second quarter was 3.95 percent.
The affordability of condominiums and townhomes also slipped in the third quarter, but were more affordable than single-family homes. About 38 percent of home buyers were able to buy a median-priced condo or townhome at $390,740. An annual income of $78,840 was required to make a monthly payment of $1,970.
The median home price in Los Angels County was $506,780 in the third quarter, with home buyers needing to make a minimum of $102,260 a year with monthly payments of $2,560. Only 24 percent of Los Angeles residents could afford to buy a median-priced home, down from 30 percent in the second quarter and 25 percent last year.
In Orange County, the median home price was $715,250, with a minimum annual income of $144,320 to make monthly payments of $3,610. Twenty percent of Orange County residents could afford to buy a median-priced home, down from 21 percent in the second quarter and flat from a year ago.
Compared with 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.
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