Affordability drops to 30% in Q2 despite low mortgage rates
San Francisco, Santa Cruz priciest markets
Home affordability dropped a bit during the second quarter in California, despite the lowest mortgage rates in three years.
Only 30% of households in the state could afford to buy the median-priced home during the second quarter, compared to 32% in the first quarter — and higher than the 26% a year ago, according to the California Association of Realtors.
Affordability is a major concern for consumers considering buying a house, homeowners looking to sell, and the hundreds of thousands employed in the real estate industry, from mortgage brokers to real estate agents.
Hefty paycheck needed for a large mortgage
The closely watched affordability index is based on the median-home price of $608,660. Homebuyers would need to earn at least $122,960 in order to qualify for the mortgage and make the monthly payments of $3,070. The figures are based on a 20% down payment — or about $120,000 — for a fixed-rate, 30-year loan.
Home-shoppers should remember that the median-home price means half the homes sold for more, the other half for less, so lower-priced houses are available.
However, home prices in the Bay Area and much of Southern California easily exceed the statewide price, according to CAR.
Kings County reigns as most affordable
San Francisco and Santa Cruz counties are the least affordable major regions in the state at 17%, both had no change from the first quarter. Mono County is the least affordable county in the state at 15%.
Kings and Madera counties in the Central Valley are the most affordable in the state at 55% and 51%, respectively.
Nationwide, the affordability rate is at 55%, based on a median-home price of $279,600, with a monthly mortgage of $1,410. Only nine California counties are below the U.S. median-home price.
Feature photo of Santa Clarita hillside homes by Feokistoff/Shutterstock
Affordability by quarter
- Q2 2019 30% 30%
- Q1 2019 32% 32%
- Q2 2018 28% 28%
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 firstname.lastname@example.org.
Affordability by county and income needed to purchase median-priced home: