A slightly less competitive housing market combined with modest household income growth allowed more Californians to purchase a median-priced home in the third quarter of 2021, according to a recent report from the California Association of Realtors
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California in third-quarter 2021 edged up to 24 percent from 23 percent in the second quarter of 2021 but was down from 28 percent in the third quarter of 2020, according to C.A.R.’s Traditional Housing Affordability Index (HAI). The third-quarter 2021 figure is less than half of the affordability index peak of 56 percent in the third 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 $148,400 was needed to qualify for the purchase of a $814,580 statewide median-priced, existing single-family home in the third quarter of 2021. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,710, assuming a 20 percent down payment and an effective composite interest rate of 3.07 percent. The effective composite interest rate was 3.20 percent in second-quarter 2021 and 3.15 percent in third-quarter 2020.
Despite setting a record high median price in third-quarter 2021, affordability for condominiums and townhomes was unchanged from the previous quarter. Thirty-seven percent of California households earned the minimum income to qualify for the purchase of a $600,000 median-priced condo/townhome in the third quarter of 2021, which required an annual income of $109,200 to make monthly payments of $2,730. The third quarter 2021 figure was down from 42 percent a year ago.
Compared with California, half of the nation’s households could afford to purchase a $363,700 median-priced home, which required a minimum annual income of $66,400 to make monthly payments of $1,660. Nationwide affordability was down from 55 percent a year ago.