Is Now Still a Good Time to Buy a Home? The number one question I…
Finally, some relief is on the horizon for homebuyers in California.
According to the California Association of Realtors (CAR), 22 out of 29 counties in the Golden State experienced an improvement in housing affordability over the first quarter of 2016 compared to the same time last year, thanks to higher wages and a slight decrease in home prices.
CAR’s Traditional Housing Affordability Index (HAI) shows that 34% of buyers can now afford to purchase a median-priced home, compared to 30% during the first quarter of 2016.
HAI measures the percent of households in the state that are able to afford to buy a median-priced, single-family house in California, and is considered to be the most important measure of housing affordability for buyers in the state.
Over the first quarter in 2016, the median price for an existing single-family home was $465,280. In order for buyers to afford this price point, they need to be earning at least $92,571 annually. Based on these prices, buyers would need to be able to comfortably afford monthly mortgage payments of $2,314, including taxes and insurance, and assuming a 20% down payment, and a 30-year, fixed-rate loan of 4.01%.
Over the last quarter of 2015, an annual income of $96,790 was required for buyers to be able to afford the median home price of $483,810 using the same mortgage data.
Condos and townhouses are also becoming more affordable as of late. Compared to the fourth quarter of 2015, 41% of households were able to afford the median purchase price of $389,910 for condominiums or townhouses over the first quarter of 2016, an increase of 2%. In order to be able to afford monthly mortgage payments of $1,939, including taxes and insurance, buyers need to earn a minimum of $77,575 per year.
During the first quarter of 2016, the most affordable counties in the state were:
Kings – 58%
San Bernardino – 57%
Merced – 55%
Kern – 55%
The least affordable areas in California over the same quarter were:
San Francisco – 13%
San Mateo – 16%
Santa Cruz – 18%
There’s still a long way to go, as this marks the 12th consecutive quarter that the HAI has been under 40%, and is still somewhat near to the 2008 low level of 29%. The state’s housing affordability index reached a high of 56% in the 2012’s first quarter.