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Affordability improves in Q4, thanks to lower prices

More families could afford to buy a home during the fourth quarter than the previous three-month period, as falling home prices helped ease the pain of higher mortgage rates.

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Falling home prices helped offset an increase in mortgage rates, as affordability inched higher during the fourth quarter in California.  

The California Association of Realtors estimates 28% of households in the state could afford the median-priced home during the October-through-December period, compared to 27% in the third quarter — but down from 29% a year earlier.

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Buyers would need to earn at least $122,340 to make the monthly payment of $3,060, including principal, interest and property taxes on a 30-year, fixed-rate mortgage at a 4.95% interest rate. The calculation is based on a statewide median-home price of $564,270.

Of course, home prices and affordability varies throughout the state. Mono and Santa Cruz counties were the least affordable at 12%, while two of every three households could buy in Lassen County, the most affordable market in the state.

Six counties had affordability rates below 20%, while only four counties topped 50% during the the fourth quarter. The national affordability rate is 54%, thanks to a median-home price $257,600 — or about $300,000 less than the California price. The average U.S. household needs to earn only $55,850 to qualify for a mortgage, and the payment would be about $1,400 per month.

Affordability below 30% six of past eight quarters

Household income of $37,940 could qualify a family for a home in Lassen County, while more than $325,000 is needed in San Francisco and San Mateo counties.

The closely watched housing affordability index has been below 30% for six of the past eight quarters. The state hit a peak of 56% in first-quarter 2012, as the housing market was recovering from the downturn — and more people were returning to work following the the Great Recession.

Feature photo by Ann Baldwin/Shutterstock

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Affordability by quarter

[/et_pb_text][et_pb_counters admin_label=”Affordability by quarter” _builder_version=”3.19.14″][et_pb_counter _builder_version=”3.19.14″ percent=”28″ link_option_url_new_window=”off” use_background_color_gradient=”off” background_color_gradient_start=”#2b87da” background_color_gradient_end=”#29c4a9″ background_color_gradient_type=”linear” background_color_gradient_direction=”180deg” background_color_gradient_direction_radial=”center” background_color_gradient_start_position=”0%” background_color_gradient_end_position=”100%” background_color_gradient_overlays_image=”off” parallax=”off” parallax_method=”on” background_size=”cover” background_position=”center” background_repeat=”no-repeat” background_blend=”normal” allow_player_pause=”off” background_video_pause_outside_viewport=”on” bar_background_color=”#0c71c3″ text_shadow_style=”none” title_text_shadow_style=”none” percent_text_shadow_style=”none” box_shadow_style=”none” hover_transition_duration=”300ms” hover_transition_delay=”0ms” hover_transition_speed_curve=”ease”]

Q4 2018

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Q3 2018

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Q4 2017

[/et_pb_counter][/et_pb_counters][et_pb_team_member admin_label=”Author” _builder_version=”3.19.9″ name=”About the author” image_url=”https://www.calhomenews.com/wp-content/uploads/2019/01/Trujillo-Tahoe.jpg” border_radii_image=”|0px|0px|0px|0px” header_level=”h5″ header_font=”Libre Franklin|700|||||||” body_font=”Libre Baskerville||||||||” border_radii=”|0px|0px|0px|0px” border_color_all_image=”#000000″ background_color=”#ffffff” twitter_url=”https://twitter.com/rontrujillo” linkedin_url=”https://www.linkedin.com/in/rontrujillo/” saved_tabs=”all” link_option_url_new_window=”on”]

Ron Trujillo, an award-winning business journalist-turned-public relations executive, is the editor-owner of CalHomeNews and can be reached at ron@cahomenews.com.

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Affordability by county and income needed to purchase median-priced home:

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15%; $326,920

[/et_pb_blurb][et_pb_blurb _builder_version=”3.19.14″ title=”San Diego” image=”https://www.calhomenews.com/wp-content/uploads/2018/12/San-Diego-Bay-Daniel-Guerra-UNSPLASH-e1543791270175.jpg”]

24%; $135,710

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24%; $124,900

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42%; $78,700

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