Original Article – https://www.car.org/aboutus/mediacenter/newsreleases/2022releases/4qtr2021affordability
LOS ANGELES (Feb. 10) – A tempering of home price growth combined with a solid increase in household incomes improved the affordability outlook for Californians in the fourth quarter of 2021, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in fourth-quarter 2021 inched up to 25 percent from 24 percent in the third quarter of 2021 but was down from 27 percent in the fourth quarter of 2020, according to C.A.R.’s Traditional Housing Affordability Index (HAI). The fourth-quarter 2021 figure is less than half of the affordability index peak of 56 percent in the first quarter of 2012.
C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. C.A.R. also reports affordability indices for regions and select counties within the state. The index is considered the most fundamental measure of housing well-being for home buyers in the state.
A minimum annual income of $148,000 was needed to qualify for the purchase of a $797,470 statewide median-priced, existing single-family home in the fourth quarter of 2021. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,700, assuming a 20 percent down payment and an effective composite interest rate of 3.28 percent. The effective composite interest rate was 3.07 percent in third-quarter 2021 and 2.96 percent in fourth-quarter 2020.
With the median price of condominiums and townhomes reaching another record high in fourth-quarter 2021, affordability for condos and townhomes dipped from the previous quarter. Thirty-six percent of California households earned the minimum income to qualify for the purchase of a $610,350 median-priced condo/townhome in the fourth quarter of 2021, which required an annual income of $113,200 to make monthly payments of $2,830. The fourth quarter 2021 figure was down from 41 percent a year ago.
Compared with California, half of the nation’s households could afford to purchase a $361,700 median-priced home, which required a minimum annual income of $67,200 to make monthly payments of $1,680. Nationwide affordability was down from 55 percent a year ago.
Key points from the fourth-quarter 2021 Housing Affordability report include:
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