Twenty-eight percent of California households could afford the median-priced home in the fourth quarter of 2018, down slightly from the same time in 2017.
However, California's four million-dollar housing markets--San Mateo, San Francisco, Marin and Santa Clara Counties all saw affordability improve year over year.
(interior of a house in San Mateo County)
All four California counties where it takes seven figures to buy a home can be found in the Bay Area, and they were all among the 10 in the state that saw housing affordability increase from the fourth quarter of 2017.
The California Association of Realtors’ latest Housing Affordability Index says that 28 percent of the state’s households could afford the median-priced $564,270 single-family home as of the fourth quarter, assuming a 20 percent down payment and a 30-year, fixed-rate mortgage at 4.95 percent. Affordability inched down from 29 percent in the fourth quarter of 2017, which CAR attributes to higher mortgage rates. California housing affordability has been cut in half since early 2012, when 56 percent of residents could qualify for a mortgage on a median-priced home.
Households in San Mateo and San Francisco counties must earn more than $325,000 per year to make monthly mortgage payments that exceed $8,000.
(House in San Francisco)
Even if California’s housing affordability is about half the national average of 54 percent, buyers here are slowly gaining more leverage. In a new analysis of Bay Area and Los Angeles sales data, Compass Chief Economist Selma Hepp found that price reductions in both of those regions have increased in recent months, as appreciation slows and buyers find themselves with more options from which to choose.
(Cover picture courtesy of Jamie, www.unsplash.com)