During the third quarter, only 28% of Californian homebuyers could afford to purchase a median-priced, existing single-family home in the state. This figure is a decrease from 29% in the second quarter and 31% in the year-ago period, according to CAR's Traditional Housing Affordability Index. CAR said that the third-quarter figure represents the 18th straight period where the index was below 40% and is the lowest level since the third quarter of 2015.
CAR found that $112,100 was the minimum annual income a homebuyer needed to qualify for the purchase of an existing single-family home during the quarter, which had a statewide median price of $555,680. For a 30-year, fixed-rate loan, a homebuyer would have a monthly payment of $2,800, including taxes and insurance, assuming a 20% down payment and an effective composite interest rate of 4.16%. The third-quarter effective composite interest rate compares to 4.09% in the prior quarter and 3.76% in the third quarter of 2016.
Condominiums and townhomes were also less affordable during the third quarter. The percentage of households in the state that earned the minimum income to qualify for the purchase of a $440,000 median-priced condominium/townhome fell to 38% in the third quarter from 39% in the second quarter. An annual income of $88,770 was required to make monthly payments of $2,220.
California existing-home sales rise, but prices slip
CAR expects strong demand to support California housing market in 2018
Higher home prices and weaker homebuyer purchasing power due to the constrained housing inventory drove a drop in housing affordability in California to its lowest level in 10 years, according to the California Association of Realtors (CAR).