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First Quarter 2015 California Housing Affordability

May 28, 2015

For release:
May 12, 2015

Lower interest rates and steady home prices ease California housing affordability for second straight quarter

Seventeen regions see improvement from previous quarter, with Napa, Merced, Marin, San Luis Obispo, Los Angeles, and Alameda counties leading the way

LOS ANGELES (May 12) – Lower interest rates and stabilizing home prices over the past year combined to make it easier for more Californians to purchase a home in the first quarter of 2015, 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 first-quarter 2015 rose to 34 percent from the 31 percent recorded in the fourth quarter of 2014 and up from 33 percent in the first quarter a year ago, according to C.A.R.’s Traditional Housing Affordability Index (HAI).  This is the second consecutive quarter of improvements for the state and the highest level since second-quarter 2013. California’s housing affordability index hit a peak of 56 percent in the first 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 $87,700 to qualify for the purchase of a $442,430 statewide median-priced, existing single-family home in the first quarter of 2015.  The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,190, assuming a 20 percent down payment and an effective composite interest rate of 3.97 percent. 

The median home price was $418,570 in first-quarter 2014, and an annual income of $86,800 was needed to purchase a home at that price. The effective composite interest rate in first-quarter 2014 was 4.46 percent. 

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

• The affordability picture was promising when comparing quarterly changes. Seventeen regions had improvements, nine had declines, and two were unchanged. Compared to first-quarter 2014, 11 regions had improvements, 12 had declines, and six held steady.

• Marin, San Luis Obispo, and Monterey counties saw the largest year-to-year improvements in affordability, mainly due to increases in median annual household income and interest rate declines.
• Contra Costa, Solano, and San Joaquin counties experienced the largest year-to-year declines in affordability, resulting from double-digit home price growth.

• Affordability in Santa Clara and Sacramento counties held steady from the previous quarter, primarily due to moderate home price growth, which was offset by interest rate declines.

• Marin, Napa, and Santa Cruz counties had the largest quarter-to-quarter improvements in affordability, mainly due to increases in the median annual household income, and declines in the interest rate and prices.

• Contra Costa, Santa Barbara, and San Mateo counties posted the largest quarter-to-quarter declines in affordability as the result of strong home price gains.

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  34  $           442,430  $               2,190  $             87,700
CA Condo/Townhomes 41  $           369,420  $               1,830  $             73,230
Los Angeles Metropolitan Area 35  $           414,970  $               2,060  $             82,260
Inland Empire 47  $           281,000  $               1,390  $             55,700
S.F. Bay Area 23  $           748,330  $               3,710  $           148,330
U.S. 61  $           205,200  $               1,020  $             40,670
         
S.F. Bay Area        
Alameda 23  $           707,320  $               3,510  $           140,200
Contra-Costa (Central County) 21  $           755,760  $               3,750  $           149,810
Marin 19  $       1,036,050  $               5,130  $           205,370
Napa 34  $           492,550  $               2,440  $             97,630
San Francisco 12  $       1,175,850  $               5,830  $           233,080
San Mateo 14  $       1,202,000  $               5,960  $           238,260
Santa Clara 22  $           900,000  $               4,460  $           178,400
Solano 48  $           337,000  $               1,670  $             66,800
Sonoma 31  $           489,650  $               2,430  $             97,060
Southern California        
Los Angeles 31  $           434,710  $               2,150  $             86,170
Orange County 22  $           685,680  $               3,400  $           135,920
Riverside County 42  $           322,620  $               1,600  $             63,950
San Bernardino 58  $           212,300  $               1,050  $             42,080
San Diego 28  $           510,330  $               2,530  $           101,160
Ventura 28  $           583,820  $               2,890  $           115,720
Central Coast        
Monterey 29  $           465,000  $               2,300  $             92,170
San Luis Obispo 30  $           492,390  $               2,440  $             97,600
Santa Barbara 18  $           680,550  $               3,370  $           134,900
Santa Cruz 22  $           695,000  $               3,440  $           137,760
Central Valley        
Fresno 51  $           212,200  $               1,050  $             42,060
Kings County 62  $           186,000  $                   920  $             36,870
Madera 51  $           212,500  $               1,050  $             42,120
Merced 60  $           177,240  $                   880  $             35,130
Placer County 46  $           379,080  $               1,880  $             75,140
Sacramento 49  $           275,810  $               1,370  $             54,670
San Joaquin 39  $           269,400  $               1,340  $             53,400
Stanislaus 43  $           237,200  $               1,180  $             47,020
Tulare 57  $           175,930  $                   870  $             34,870


CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index

STATE/REGION/COUNTY Q1 2015 Q4 2014   Q1 2014  
CA SFH  34 31   33  
CA Condo/Townhomes 41 39   41  
Los Angeles Metropolitan Area 35 34   35  
Inland Empire 47 47   47  
S.F. Bay Area 23 21   23  
U.S. 61 59   61  
           
S.F. Bay Area          
Alameda 23 20   22  
Contra-Costa (Central County) 21 23   24  
Marin 19 15   15  
Napa 34 24   28  
San Francisco 12 11 r 13 r
San Mateo 14 15   14  
Santa Clara 22 22   22  
Solano 48 50   53  
Sonoma 31 29   29  
Southern California          
Los Angeles 31 28   31  
Orange County 22 21   21  
Riverside County 42 41   42  
San Bernardino 58 57   61  
San Diego 28 27   27  
Ventura 28 29   29  
Central Coast          
Monterey 29 27   23  
San Luis Obispo 30 26   24  
Santa Barbara 18 21   18  
Santa Cruz 22 17   20  
Central Valley          
Fresno 51 53   54  
Kings County 62 64   64  
Madera 51 50 r 54 r
Merced 60 53   58  
Placer County 46 45   45  
Sacramento 49 49   50  
San Joaquin 39 41   42  
Stanislaus 43 44   46  
Tulare 57 56   59  

r = revised

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.


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