Affordability Nationwide and in the Bay Area

Green Escrow Services | American economy

ATTOM Data Solutions’ Q4 2016 Affordability Index calculates the percentage of wages that U.S. homeowners will pay baed on a 3 percent down payment and a 30-year fixed mortgage on a county-wide basis. These percentages are compared to heir historical norms to calcu\ate the affordability index.

By this measure home affordability declined to an eight-year low in the fourth quarter of 2016 as homeowners must spend 36.9 percent of their wages on mortgage payments. Nationwide, 29 percent of counties are less affordable than their historic norms.

Not surprisingly, in the Bay Area Alameda, Contra Costa, San Francisco and Sonoma counties are currently less affordable than their historic norms.

Many analysts see price appreciation and slow wage growth coupled with rising mortgage rates as indicators that the affordability index will not improve in 2017.

Affordability Improves in the Bay Area, But…

Green Escrow Services | American economy

A recent Home Affordability Index, which calculates the percentage of income needed to make monthly payments on a median-price home with a 30-year, fixed-rate mortgage and 3 percent down payment, states in a third quarter report that affordability nationwide is at its lowest level in seven years although there have been modest gains in the Bay Area.

Affordability improved in Napa, Sonoma, Santa Clara, and Marin counties while it declined in Solano, San Mateo, Contra Costa, San Francisco, and Alameda counties. Six of the least affordable housing markets in the United States are located in California including both San Francisco and Napa counties.

As an indicator of difficulty of housing affordability, since 2012 home prices have increased 10 times faster than wages nationwide.

Modest Improvement in Bay Area Housing Affordability

Green Escrow | Real Estate Market News

The California Association of Realtors reports that there was a modest – very modest – improvement in Bay Area housing affordability during the July-September in 2014.

The Traditional Housing Affordability Index stated that 30 percent of homebuyers could afford to buy a median-price, existing single-family home in California. The index measures the percentage of all households that can afford to purchase a median-price, single-family home in California.

California home buyers would need to earn a minimum annual income of $94,960 to qualify for the purchase of a $467,700 statewide median-price, existing single-family home in the third quarter of 2014. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,370, which assumes a 20 percent down payment and an effective composite interest rate of 4.23 percent.

According to the report, lower interest rates and smaller home price gains were responsible for the slight improvement

Housing Affordability Index Remains Steady

Green Escrow | Real Estate News

After 6 consecutive quarters of declines, he percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California was unchanged from the third quarter of 2013 at 32 percent. This was down from 48 percent in fourth-quarter 2012, according to California Association of Realtors Traditional Housing Affordability Index (HAI).

The Traditional Housing Affordability Index (HAI) measures the percentage of all households that can afford to purchase a median-priced, single-family home in California.