After hitting a 10-year low in third-quarter 2017, slightly lower home prices and steady mortgage rates allowed more Californians to purchase a home in the fourth quarter of 2017, the California Association of Realtors said Tuesday in reporting a slight improvement in housing affordability.
The percentage of home buyers who could afford to purchase a median- priced existing single-family home in California in fourth-quarter 2017 edged up to 29 percent from 28 percent in the third quarter of 2017 but was down from 31 percent in the fourth quarter a year ago, according to C.A.R.’s Traditional Housing Affordability Index. This is the 19th consecutive quarter that the index has been below 40 percent.
California’s housing affordability index hit a peak of 56 percent in the first quarter of 2012.
C.A.R.’s affordability index measures the percentage of all households that can afford to purchase a median-priced single-family home in California. The index is considered the most fundamental measure of housing well-being for homebuyers in the state, according to C.A.R.
A minimum annual income of $111,260 was needed to qualify for the purchase of a $550,990 statewide median-priced, existing single-family home in the fourth quarter of 2017. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,780, assuming a 20 percent down payment and an effective composite interest rate of 4.17 percent. The effective composite interest rate in third-quarter 2017 was 4.16 percent and 3.91 percent in the fourth quarter of 2016.
Conversely, the affordability of condominiums and townhomes dipped in fourth-quarter 2017 compared to the previous quarter, with 37 percent of California households earning the minimum income to qualify for the purchase of a $449,720 median-priced condominium/townhome, down from 38 percent in the third quarter. An annual income of $90,810 was required to make monthly payments of $2,270. Thirty-eight percent of households could afford to purchase the $446,800 priced condo or townhome in third-quarter 2017.
—City News Service
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