Home Ownership is Out of Reach for Majority of Californians

Home Ownership is Out of Reach for Majority of Californians

Home Ownership is Out of Reach for Majority of Californians

Less than 33% of California residents earn enough money to afford the cost of a Golden State home.

Lower interest rates failed to offset strong seasonal price increases, making it harder for Californians to purchase a home in Q-2 of Y 2016, the California Association of Realtors said Wednesday.

The percentage of home buyers who could afford to purchase a median priced existing single-family residence in California in Q-2 fell to 31% from the 34% recorded in Q-1 and was up from 30% in Q-2 of Y  2015, according to CAR’s Traditional Housing Affordability Index.

This is the 13th Quarter running that the index has been below 40%. It is near the mid-2008 low level of 29%, according to CAR. California’s housing affordability index hit a peak of 56% in Q-1 of Y 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-yr fixed-rate loan, would be $2,530, assuming a 20% down payment and an interest rate of 3.85%.

Condominiums and townhomes also were slightly less affordable than in the previous Quarter.

About 40% of California households earned the minimum income to qualify for the purchase of a condominium or townhome in Q-2 of Y 2016, down from 41% in Q-1. An annual income of $80,663 was required to make monthly payments of $2,017.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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