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Affordability inches higher – for now

Affordability inches higher – for now

By Ron Trujillo/ron@calhomenews.com

Slightly lower home prices and more stable interest rates helped the affordability rate inch higher during the fourth quarter, though the trend may be brief.

Twenty-nine percent of homebuyers could afford to buy the median-priced home in the final three months of 2017, compared to 28% during the third quarter – a 10-year low, according to the California Association of Realtors. The current affordability rate compares to 31% in fourth-quarter 2016.

Despite the affordability bump, the affordability index has been below 40% for 19-consecutive quarters. California remains one of the least affordable states.

Annual income of at least $111,260 was needed to qualify for the purchase of the $550,990 median-priced home. The monthly payment, including taxes and insurance, on a 30-year, fixed-rate mortgage would $2,780.

The Bay Area, as always, is the least affordable housing market in the state, with only 12% of home shoppers able to purchase in San Francisco. San Mateo and Santa Clara are the second- and third-least affordable markets at 14% and 15%, respectively.

Only seven counties have affordability rates of 50% or more in the state, with Tehama County topping the list at 56%.

But experts advise that affordability will likely decline in the first quarter, especially as interest rates are at a four-year high.

Feature photo by Ann Simpson/Shutterstock

Affordability around the state

Bakersfield

54%

Los Angeles

25%

Sacramento

43%

San Diego

26%

Santa Cruz

17%

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