email@example.com | May 18, 2019 | 0
Earn $102,000? You may be able to buy a home
By Ron Trujillofirstname.lastname@example.org
Housing affordability remained basically unchanged during the first quarter, with about one of every three households able to buy the median-priced home in California.
Higher household incomes and a slight decline in the median-home price helped offset a moderate increase in mortgage rates, with 32% of households able to afford a home in the first quarter compared to 31% in fourth-quarter 2016 – and down from 34% a year ago, according to the California Association of Realtors.
Affordability is a critical issue for the state, from the Bay Area to San Diego. The state’s affordability rate has been below 40% for the past four years, and is close to the record-low 29% in mid-2008, the beginning of The Great Recession and the housing crisis.
As home prices continued to decline during the recession, more consumers could afford a home, reaching a peak of 56% in fourth-quarter 2012.
But a better economy and few homes on the market have pushed prices to record or near-record levels in much of the state, reducing the number of consumers able to buy a home.
Kern (Bakersfield) and Tehama counties were the most affordable at 55%, followed by Kings and Sutter at 53% each. San Francisco and Santa Barbara counties were the least affordable at 13% and 14%, respectively.
You can check many counties in the state on the CAR website.
The affordability equation
So what determines the affordability index?
- Homebuyers needed to earn at least $102,050 per year to qualify for the median-priced home of $496,620 during the first quarter.
- The monthly payment, including taxes and insurance, on a 30-year, fixed-rate mortgage would be $2,550.
- The figure is based on a 20% down payment – or almost $100,000 – with an interest rate of 4.36%.