Pixel Tracker

Monday, February 18 , 2019, 7:07 pm | Fair 50º


Ed Fuller: California Housing Affordability Stabilizes as Home Price Increases Slow

As home price gains eased toward the end of 2013, California’s housing affordability held steady in the fourth quarter of 2013 from the previous quarter, following six consecutive quarters of declines, the California Association of Realtors reported.

Ed Fuller
Ed Fuller

The percentage of homebuyers who could afford to purchase a median-priced, existing single-family home in California was unchanged from the third quarter of 2013 at 32 percent, but was down from 48 percent in fourth-quarter 2012, according to the association's Traditional Housing Affordability Index (HAI).

While the California homebuyers had a window of opportunity to make very affordable home purchase from 2009 (Q1 HAI at 56 percent) through early 2013 (Q1 HAI at 44 percent), 32 percent is the long-run average for California’s HAI and nothing to get alarmed about.

The association's HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. Homebuyers needed to earn a minimum annual income of $89,240 to qualify for the purchase of a $431,510 statewide median-priced, existing single-family home in the fourth quarter of 2013.

The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,230, assuming a 20 percent down payment and an effective composite interest rate of 4.43 percent. The effective composite interest rate in third-quarter 2013 was 4.36 percent and 3.5 percent in the fourth quarter of 2012. The median home price was $352,450 in fourth-quarter 2012, and an annual income of $66,860 was needed to purchase a home at that price.

California housing affordability hit a record high of 56 percent in the first quarter of 2012 but has steadily declined since then, as a lack of housing supply and high demand drove up home prices and, along with increasing interest rates, significantly reduced affordability.

At the county level, housing affordability was mixed, with affordability mostly improving or unchanged in most counties in the San Francisco Bay Area, except Sonoma County, which decreased. In Southern California, Riverside and San Bernardino counties experienced a drop in affordability as home prices have recovered significantly. At an index of 67 percent, Madera County was the most affordable county of the state, while San Mateo County was the least affordable at 16 percent. Santa Barbara County (including the north) saw its HAI decrease from 27 percent in Q4 2012 to 18 percent in Q4 2013.

The index provides a snapshot overview that may not accurately reflect the well-being of the state's households. True, if all households in the state were to enter the homebuying market today, only 32 percent of them would be able to purchase the median-priced home. But the vast majority of homeowners have already made their purchase. Almost by definition, they afforded it when they bought, and, as their costs were fixed at that time, are able to continue affording it, no matter how much more expensive it may be to a new buyer.

One thing that nearly every housing expert can agree on is that California needs more entry-level homeownership opportunities — along with water!

Ed Fuller is a real estate broker with San Roque Realty Inc. and president of the Santa Barbara Association of Realtors. Contact him at [email protected] or 805.687.1551. The opinions expressed are his own.

Talk to Us!

Please take Noozhawk's audience survey to help us understand what you expect — and want — from us. It'll take you just a few minutes. Thank you!

Get Started >

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made using a credit card, Apple Pay or Google Pay, or click here for information on recurring credit-card payments and a mailing address for checks.

Thank you for your vital support.

Become a Noozhawk Supporter

First name
Last name
Select your monthly membership
Or choose an annual membership

Payment Information

Membership Subscription

You are enrolling in . Thank you for joining the Hawks Club.

Payment Method

Pay by Credit Card:

Mastercard, Visa, American Express, Discover
One click only, please!

Pay with Apple Pay or Google Pay:

Noozhawk partners with Stripe to provide secure invoicing and payments processing.
You may cancel your membership at any time by sending an email to .(JavaScript must be enabled to view this email address).

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click Here to Get Started >

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.