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Affordability improves in Q4, thanks to lower prices

Affordability improves in Q4, thanks to lower prices

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.

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

Affordability by quarter
  • Q4 2018 28% 28%
  • Q3 2018 27% 27%
  • Q4 2017 29% 29%
About the author
About the author

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

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

San Francisco

15%; $326,920

San Diego

24%; $135,710

Los Angeles

24%; $124,900


42%; $78,700

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