Higher Home Prices Reduce California Housing Affordability

Rising home prices offset lower interest rates, reducing housing affordability in California during the third quarter of 2012, C.A.R. reported Monday.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California fell to 49 percent in the third quarter of 2012, down from 51 percent in second-quarter 2012 and from 51 percent in third-quarter 2011, according to C.A.R.’s Traditional Housing Affordability Index (HAI).

Home buyers needed to earn a minimum annual income of $65,810 to qualify for the purchase of a $339,860 statewide median-priced, existing single-family home in the third quarter of 2012.  The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,650, assuming a 20 percent down payment and an effective composite interest rate of 3.72 percent.  The effective composite interest rate in second-quarter 2012 was 3.92 percent and 4.63 percent in the third quarter of 2011.

~CALIFORNIA ASSOCIATION OF REALTORS®