Well, sooner or later, as home prices keep climbing, and mortgage interest rates along with them, the number of folks who can afford to buy a home drops.  As the following bit of info indicates, affordability has gone down in recent months, and may continue to do so in the immediate future.

Twenty-six percent of California households could afford to purchase the median-priced single-family home in the second quarter, down on both a quarterly and yearly basis.

  • Thirty-seven of 45 tracked California counties were less affordable than they were in the second quarter of 2017.
  • In the Bay Area, affordability declined year over year in five counties, improved slightly in two, and was unchanged in two.


Hands typing on a calculatorThe number of Golden State residents who could afford to purchase a home declined in the most recently completed quarter, with more than 80 percent of counties less affordable than they were one year ago.

That’s according to the latest Housing Affordability Index from the California Association of Realtors, which says that 26 percent of households in the state could afford to purchase the median-priced $596,730 single-family home in the second quarter, down from 31 percent in the first quarter and 29 percent one year earlier. California households must earn a minimum of $126,490 to meet the monthly mortgage obligation, assuming a 30-year, fixed rate loan at 4.70 percent and a 20 percent down payment.

The number of Californians who can afford a home has been below 40 percent for 21 straight quarters. In the second quarter, 37 of 45 counties that CAR tracks saw affordability decline on an annual basis.

In the nine-county Bay Area, affordability dipped to 18 percent, down on both a quarterly and yearly basis. Five local counties saw affordability conditions further deteriorate from the second quarter of 2017: Alameda (16 percent), Contra Costa (29 percent), Santa Clara (16 percent), Solano (38 percent), and Sonoma (20 percent). The number of Marin County and San Francisco households that could afford a home improved slightly, to a respective 18 percent and 14 percent, which CAR attributes to wage growth. Affordability conditions were unchanged in San Mateo (14 percent) and Napa (25 percent) counties from the second quarter of last year.

Housing affordability in the Bay Area is unlikely to improve given the combination of rising prices and higher mortgage rates. According to CAR’s latest home sales and price report, the nine-county region saw double-digit percent annual appreciation for the 12th consecutive month in June. For the week ended Aug. 2, Freddie Mac put 30-year, fixed-rate mortgages at 4.52 percent, up from 3.96 percent at the same time in 2017.

Affordability is always a good thing to keep track of, regardless whether you’re thinking of buying, selling or maintaining your current status.  Whatever your situation, we can help provide answers.  Just pick up the phone.  We’d be happy to help.  The numbers: Peter: (415) 279-6466; Jane: (415) 531-4091.  We’re always available to help in any real estate related area.