Q4 2019 housing affordability improves, market activity strong in Bay Area, says Realtor official

Housing affordability held its own in the San Francisco Bay Area during the fourth quarter of 2019. In fact, affordability improved from fourthquarter 2018 in every county in the region, including Santa Clara County.

“The market here in Silicon Valley has recently become extremely competitive,” said Mary Kay Groth, president of the Silicon Valley Association of Realtors. “Some price points are seeing multiple offers with as many as 25 or more parties bidding on one property. This continues to be a challenge for buyers even though interest rates are comparatively low.”

According to C.A.R.’S Traditional Housing Affordability Index (HAI), 22 percent of homebuyers in Santa Clara County could afford to purchase a median-priced, existing single-family home in California in fourthquarter 2019, unchanged from the third quarter of 2019. This is an improvement from the previous year when 18 percent of homebuyers could afford to purchase a median-priced home in the fourth quarter of 2018.

Santa Clara County homebuyers needed a minimum annual income of $245,200 to qualify for the purchase of a $1,246,000 countywide median-priced, existing single-family home in the fourth quarter of 2019. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $6,130, assuming a 20 percent down payment and an interest rate of 3.89 percent.

C.A.R. says slightly higher mortgage interest rates offset steady home prices and held California housing affordability constant during the fourth quarter of 2019. However, more Californians could afford a home purchase compared to a year ago.

Statewide, the percentage of homebuyers who could afford to purchase a median-priced, existing single-family home in fourth-quarter 2019 was at 31 percent, unchanged from third-quarter

2019, but was up from 28 percent in the fourth quarter of 2018. A minimum annual income of $119,600 was needed to qualify for the purchase of a $607,040 statewide median-priced, existing single-family home in the fourth quarter of 2019. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,990, assuming a 20 percent down payment and an interest rate of 3.89 percent. The interest rate was 3.85 percent in third-quarter 2019 and 4.95 percent a year ago.

Forty-one percent of California homebuyers were able to purchase a $480,000 median-priced condo or town home. An an- nual income of $94,400 was required to make a monthly payment of $2,360.

When compared to a year ago, housing affordability improved in 44 tracked counties and declined in four counties. San Francisco (18 percent), San Mateo (20 percent) and Santa Cruz (21 percent) counties were the least affordable areas in the state. The most affordable counties in California were Lassen (63 percent),

Kings (55 percent) and Tulare and Plumas (52 percent).

C.A.R.’S HAI is considered the most fundamental measure of housing well-being for home buyers in the state. California’s housing affordability index hit a peak of 56 percent in the fourth quarter of 2012.

Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to rmeily@silvar.org.