Buying a home in California became slightly more within reach in the last quarter of 2014 compared with the quarter prior, but affordability fell overall year-to-year.
The California Association of Realtors Traditional Housing Affordability Index determined that 31% of homebuyers could afford to purchase a median-price, existing single-family home during the fourth quarter of 2014, up from 30% in the third quarter but down from a revised 32% during the same period in 2013. This makes the seventh consecutive quarter in which the index fell below 40%, the association said Thursday.
Despite falling interest rates, high home prices throughout the state prevented homes from becoming more affordable. Statewide, a median-priced, existing single-family home came to $452,140, meaning homebuyers would need to make a minimum annual income of $91,550 to qualify for the purchase, according to CAR.
The association calculated that monthly payments would total $2,290, assuming a 20% down payment and an effective composite interest rate of 4.2%. That figure also accounts for taxes and insurance on a 30-year, fixed-rate loan.
Buyers can find the most affordable homes in Kings County in the Central Valley, with a 64 HAI, and San Bernardino in Southern California, with a 57 HAI. San Francisco, however, continued to be highly unaffordable with a 14 HAI.
Throughout the state, only three countries saw affordability decline, all as a result of price hikes: San Francisco, Madera and Merced. Santa Barbara County, meanwhile, blew the rest of the state out of the water when it came to improving affordability, rising to 21 HAI from 14 quarter-to-quarter. Contra Costa, Napa and Los Angeles counties also saw marked progress in terms of affordability.