For Most Californians, the Dream of Homeownership Is Out of Reach

LOS ANGELES, CA - Lower interest rates failed to offset strong seasonal price increases, making it harder for Californians to purchase a home in the second quarter of 2016, the California Association of Realtors said today.

The percentage of home buyers who could afford to purchase a median- priced existing single-family home in California in the second-quarter fell to 31 percent from the 34 percent recorded in the first quarter and was up from 30 percent in the second quarter of 2015, according to CAR's Traditional Housing Affordability Index.

This is the 13th consecutive quarter that the index has been below 40 percent. It is near the mid-2008 low level of 29 percent, according to CAR. California's housing affordability index hit a peak of 56 percent in the first quarter of 2012.

CAR's Housing Affordability Index measures the percentage of all households that can afford to purchase a median-priced single-family home in California. The Index is considered the most fundamental measure of housing well-being for home buyers in the state, according to Los Angeles-based CAR.

Home buyers needed to earn a minimum annual income of $101,217 to qualify for the purchase of a $516,220 median-priced single-family home in the second quarter of 2016. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,530, assuming a 20 percent down payment and an interest rate of 3.85 percent.

Condominiums and townhomes also were slightly less affordable than in the previous quarter. Forty percent of California households earned the minimum income to qualify for the purchase of a condominium or townhome in the second quarter of 2016, down from 41 percent in the first quarter. An annual income of $80,663 was required to make monthly payments of $2,017.

City News Service