Even with low interest rates, rising home prices in California are exceeding residents’ means to purchase, according to the California Association of Realtors (CAR), which says only 31 percent of the state’s population could afford to purchase an existing median-priced home in the second quarter.

  • Median home price for single-family homes in California was $516,220 through the second quarter of 2016.
  • Only 31 percent of California households could afford to purchase a home at the current median home price.
  • The minimum annual income to afford median home prices reached $101,217 -- the first time since the recession that minimum income was six figures.

Even with low interest rates, rising home prices in California are exceeding residents’ means to purchase, according to the California Association of Realtors (CAR), which says only 31 percent of the state’s population could afford to purchase an existing median-priced home in the second quarter.

The percentage fell from 34 percent during the first quarter of 2016. However, on a year-over-year basis, the amount of people who can afford a median-priced home was up from 30 percent in the second quarter of 2015.

CAR reported that this is the 13th consecutive quarter where the numbers are below 40 percent.

California’s lowest affordability percentage hit in the middle of 2008, when only 29 percent of the population could afford median-priced homes. The peak in recent years was in 2012, when it reached 56 percent.

Affordability in California by metros

Rates and figures are based on a 30-year fixed-rate mortgage with a 3.85 percent interest rate with 20 percent down payment.

In the San Francisco Bay Area, the amount of people who can afford the median homes available was only 23 percent in the second quarter, CAR says. Median price for homes in the metro area was $840,920. The SF Bay Area includes Alameda, Contra-Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano and Sonoma counties.

Using CAR’s Traditional Housing Affordability Index (HAI), the monthly home payment in the Bay Area, including taxes and insurance, came to $4,122 in the second quarter. In order to afford this, residents must earn $164,882 per year.

San Francisco proper had the highest median home price of the area, at $1.375 million, meaning average monthly payments add up to $6,740, and yearly earning must not be less than $269,601.

California Association of Realtors

San Francisco Bay Area HAI

Median home price in the city of Los Angeles was $480,040 in the second quarter. At this price, residents in L.A. must earn upwards of $94,123 to afford the $2,353 average monthly payments. The city of L.A.’s median home prices were only slightly higher than the metro area’s median price of $470,330.

According to CAR’s HAI, only 33 percent of  the metro’s residents could afford median home prices. The national median home price was $240,700 in the second quarter, accoridng to CAR. National monthly payments amount to $1,180, and yearly earnings are just below $50,000, at $47,195.

California Association of Realtors

Los Angeles metro area HAI

Affordability of single-family homes and condos

The median home price for single-family homes in California during the second quarter of 2016 was $516,220, CAR says, which equates to a monthly payment of $2,530 and a yearly income of $101,217.

Condos and townhomes held a median price of $411,390 in the second quarter. At that rate, residents must earn $80,663 per year to afford the $2,017 monthly payment.

Email Britt Chester

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