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Housing Affordability: Orange County Vs. California

Higher home prices send California housing affordability lower

California Association of Realtors LogoLOS ANGELES (Feb. 25) – Higher home prices offset lower interest rates to reduce housing affordability in California during the fourth quarter of 2012, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California decreased to 48 percent in the fourth quarter of 2012, down from 49 percent in third-quarter 2012 and from 55 percent in fourth-quarter 2011, according to C.A.R.’s Traditional Housing Affordability Index (HAI).

In Orange County, the percentage of home buyers who could afford to purchase a median priced, single-family home was at 34 percent in the 4th Quarter of 2012, down from 38 percent in the 4th Quarter of 2011.

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.

Home buyers needed to earn a minimum annual income of $66,940 to qualify for the purchase of a $353,190 statewide median-priced, existing single-family home in the fourth quarter of 2012.  The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,670, assuming a 20 percent down payment and an effective composite interest rate of 3.49 percent.  The effective composite interest rate in third-quarter 2012 was 3.72 percent and 4.30 percent in the fourth quarter of 2011.

In Orange County, home buyers needed to earn a minimum annual income of $107,760 to qualify for the purchase of a $568,600 median priced single family home in the 4th Quarter of 2012.  The monthly payment including taxes and insurance on a 30-year fixed rate loan, would be $2,690 assuming a 20 percent down payment and interest rate of 3.49 percent.

Housing affordability results were mixed at the regional level, with affordability improving from the third quarter of 2012 in Alameda, Contra Costa, Marin, Napa, Los Angeles, Ventura, San Luis Obispo, Santa Cruz, Fresno, and Kings counties.  However, homes in San Francisco, Solano, Riverside, San Bernardino, Monterey, Santa Barbara, Madera, Sacramento, and Tulare counties were less affordable during fourth quarter 2012.

At an index of 76 percent, San Bernardino and Kings counties were the most affordable counties of the state.  Conversely, San Francisco County was the least affordable, with only 22 percent of the region’s households able to purchase the county’s median-priced home.

For questions about buying and selling real estate in Huntington Beach and Coastal Orange County, contact Anna Child.