California's housing affordability crisis intensifies

by Candyd Mendoza13 Aug 2019

Home prices in California soared despite low mortgage interest rates, further reducing the affordability rate in the state during the second quarter.

The percentage of homebuyers who could afford a median-priced, existing single-family home in California in Q2 2019 fell to 30% from 32% in Q1 2019, according to the California Association of Realtors' Traditional Housing Affordability Index (HAI).

CAR's index reported that prospective buyers need a minimum annual income of $122,960 in order to qualify for a $608,660 median-priced, existing single-family home in the second quarter.

A 30-year fixed-rate loan, which includes taxes and insurance, would cost Californians monthly payments of $3,070 (assuming a 20% down payment and an effective composite interest rate of 4.17%).

Condominiums and townhomes also became less affordable in the last quarter, with the share of homebuyers who could afford the median price dropping from 41% to 40%. Households need an annual income of $95,960 to qualify for a $475,000 median-priced condominium/townhome, with monthly payments of $2,400.

Overall, 55% of households in the US could afford to buy a home at the national median price of $279,600. Homebuyers would need a minimum annual income of $56,480 to make monthly payments of $1,410 on a home priced at the national median.