Only one-third of California homebuyers could afford to purchase the median-priced, existing single-family home, valued at $610,850, during the second quarter of 2020.
That’s according to the California Association of Realtors’ (CAR) Traditional Housing Affordability Index, which pointed to an annual income of $115,200 as the threshold needed to qualify for such a purchase.
The 33 percent of buyers who could afford the median-priced home in Q2 was down from 35 percent in Q1 but marks a slight improvement over the same period last year when 30 percent could manage the cost of the typical detached home.
Assuming a 20 percent downpayment, a buyer purchasing a $610,850 single-family home would bear a $2,880 monthly payment, including taxes and insurance, for a 30-year, fixed-rate loan with an interest rate of 3.43 percent — the composite during Q2.
When broken down by metropolitan area, Los Angeles’ affordability improved by 4 percent year-over-year with a median home price of $548,000. The lower-priced Inland Empire market also saw affordability tick up from 42 percent in Q2 2019 to 46 percent in Q2 2020. In the pricey San Francisco Bay Area, where the average detached property goes for a whopping $989,000, affordability reached 28 percent, up from 24 percent during the same period one year ago.
Statewide, the affordability outlook was somewhat rosier for condominiums and townhomes during Q2, requiring a median income of $90,400 to afford a $480,000 unit. This would result in a monthly payment of $2,260, or $620 less than that of a single-family home.
California’s high cost of homeownership stands in stark contrast to the rest of the country, where 57 percent of buyers could afford the $291,300 median-priced single-family home on a yearly income of $54,800.
CAR noted that rising home prices and falling household incomes caused by the COVID-19 pandemic contributed to worsening second-quarter affordability in the state.