Housing in California has become more affordable in the first quarter due to low mortgage interest rates, higher income levels, and cooler home prices this spring, the California Association of Realtors said.
CAR’s Traditional Housing Affordability Index (HAI) showed that 32% of homebuyers could afford to purchase a median-priced, existing single-family home in Q1 2019, up from 28% last quarter and from 31% in the same period a year ago.
The index – which is considered the most significant measure of housing well-being for home buyers in the state – increased above 30% for the first time in a year since its peak of 56% in the first quarter of 2012.
“A minimum annual income of $114,860 was needed to qualify for the purchase of a $545,820 statewide median-priced, existing single-family home in the first quarter of 2019,” CAR said in a news release. “The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,870, assuming a 20% down payment and an effective composite interest rate of 4.62%. The effective composite interest rate was 4.95% in fourth-quarter 2018 and 4.44% in first-quarter 2018.”
Condominiums and townhomes also became more affordable for buyers in the first quarter compared to the past quarter. Approximately 41% of California households met the minimum income to qualify for a $450,000 median-priced condominium or townhouse, up from 37% in the previous quarter.
Meanwhile, prospective homebuyers need an annual income of $94,690 to make monthly payments of $2,370. In 2018, 39% of households could afford to purchase a condominium or townhouse.
“Compared with California, more than half of the nation's households (57%) could afford to purchase a $254,800 median-priced home, which required a minimum annual income of $53,620 to make monthly payments of $1,340,” CAR said.