State housing affordability drops

Housing affordability in California has fallen to its lowest rate in nearly 16 years, a result of interest rates consistently above six percent and not enough houses being built, according to data released Aug. 11.

Only 16 percent of the state’s households were able to afford the $830,620 median-priced home during the second quarter of 2023, down from 19 percent in the first quarter and a 17 percent decline year-over-year, the California Association of Realtors reported.

An annual income of at least $208,000 was needed to make monthly payments of $5,200 on a 30-year fixed-rate mortgage at a 6.61 percent interest. Those numbers are based on a 20 percent down payment.

This year’s second-quarter figure is less than one-third of the affordability index’s peak of 56 percent, which was recorded in the first quarter of 2012.

Twenty-five percent of all potential home buyers were able to purchase the $640,000 median-priced condo or townhome. That required an annual income of at least $160,400 in order to make monthly payments of a little more than $4,000.

The Inland Empire performed better than the state during the second quarter.

Twenty-two percent of all households in Riverside and San Bernardino counties could afford the median price – $570,000 – of a single-family home during the second quarter, a two-percent drop from the first quarter and year-over-year.  That assumes a minimum annual income of $142,000 and monthly minimum mortgage payments of $3,570, according to the association.