Fewer Californians Can Afford to Buy a House

RISMEDIA, May 9 – The percentage of households in California able to afford a median-priced home stood at 18 percent in March, a 3 percentage-point decrease compared with the same period a year ago when the index was at 21 percent, according to the California Association of Realtors (C.A.R.). The March Housing Affordability Index (HAI) declined 1 percentage point from February, when it stood at 19 percent. C.A.R.’s monthly housing affordability index measures the percentage of households that can afford to purchase a median-priced home in California. C.A.R. also reports housing affordability indexes for regions and select counties within the state. The index is the most fundamental measure of housing well-being in the state. The minimum household income needed to purchase a median-priced home at $495,400 in California in March was $115,910, based on an average effective mortgage interest rate of 5.81 percent and assuming a 20 percent downpayment. The minimum household income needed to purchase a median-priced home was up from $97,290 in March 2004, when the median price of a home was $428,060 and the prevailing interest rate was 5.48 percent. The minimum household income needed to purchase a median-priced home at $195,000 in the U.S. in March 2005 was $45,620.