Bay Area Home Affordability Improves in the Forth Quarter

Housing affordability improved in the Bay Area and across California in the fourth quarter of 2015 — welcome news for homebuyers.

The California Association of Realtors said its fourth-quarter Housing Affordability Index reached 24 percent in the nine-county Bay Area, up two percentage points from the previous quarter and up three points from a year earlier. Statewide,  housing affordability stood at 30 percent — a gain of one percentage point from the third quarter but down one point from the fourth quarter of 2014.

The Housing Affordability Index tracks the percentage of homebuyers who can afford to purchase a median-priced, single-family home, and CAR credits the improved affordability to lower interest rates and level home prices.

Even with the rising numbers, however, homeownership remains out of reach for many more Californians and Bay Area residents than elsewhere in the United States. Nationwide, 58 percent of homebuyers could afford a median-priced home in their community.

In the Bay Area, housing affordability rose from the third to the fourth quarter in seven of nine counties. It stayed the same in one (Napa) and fell two percentage points in another (Marin).

Solano was the Bay Area’s most affordable county in the fourth quarter, with 45 percent of buyers able to afford a home there. It was followed by Contra Costa (37 percent), Sonoma (26 percent), Alameda (22 percent), and Napa (21 percent). The least affordable counties in the state that CAR tracks were San Francisco (11 percent), San Mateo (14 percent), Marin (17 percent), and Santa Clara (20 percent).

Homebuyers in the Bay Area needed to earn a minimum annual income of $147,080 to qualify for the purchase of a $735,170 median-priced, single-family home in the fourth quarter. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,680, assuming a 20 percent down payment and an effective composite interest rate of 4.07 percent.

(Image: Flickr/Pictures of Money)

Source: Pacific Union

Bay Area Housing Markets Highly Unaffordable for Low-Down-Payment Buyers

Although nine out of 10 U.S. homes are more affordable than their historic averages for buyers using low-down-payment programs, that’s not the case here in the Bay Area, according to a recent report.twenties

In a study conducted with Down Payment Resource, RealtyTrac analyzed 370 U.S. counties for affordability and accessibility to buyers making down payments of 3 percent. Typically, buyers who leverage programs like the ones introduced by Freddie Mac and Fannie Mae late last year include first-time buyers and boomerang buyers – those who underwent foreclosure during the housing bust and want to purchase property again.

The report says that 90 percent of those counties were more affordable for low-down-payment homebuyers in April when compared with their historic averages, based on the percentage of income necessary to purchase a median-priced home with 3 percent down. San Diego ranked as the No. 1 U.S. county where homes were the most affordable compared with their historic averages, with the average low-down-payment homeowner spending 52.7 percent of their income on mortgage payments. Southern California’s Riverside County placed No. 2 for best low-down-payment affordability, with 39.3 percent of income earmarked for housing costs.

Here in Northern California, it was a completely different story, with four Bay Area counties ranking among the country’s 10 least affordable for first-time and boomerang buyers when compared with historic numbers. Perhaps not surprisingly, San Francisco was the least affordable U.S. market for low-down-payment buyers. A San Francisco homebuyer who placed a 3 percent down payment would actually need to pay more than they earn to afford a mortgage: 113.97 percent of income, compared with the county’s historical affordability of 83.48 percent.

San Mateo County was the nation’s fourth least affordable down-payment market, requiring 87.17 percent of income to purchase a home compared with the historic average 69.98 percent. Marin County followed in the No. 5 spot, with the average owner spending 71.78 percent on housing compared with 66.5 percent historically.Santa Clara County was the nation’s seventh least affordable low-down-payment market, with 62.37 percent of income necessary to make mortgage payments, compared with a historical average of 52.36 percent.

ReatlyTrac says that the average U.S. down-payment assistance benefit was $10,443 in April. San Francisco buyers using such a program can expect to receive $51,713 in funds, the most of any county in the nation. Homebuyers in Lake Tahoe‘s Placer County had the nation’s fourth highest levels of down-payment help at $35,475.

In a statement accompanying the report, Down Payment Resource CEO Rob Crane said that low-down-payment buyers likely have options in most U.S. metro areas, even those that rank among the least affordable. Still, as RealtyTrac Vice President Daren Blomquist cautioned, some first-time and boomerang buyers hoping to realize or regain their homeownership dreams might have to trade short commutes for down-payment assistance.

“This analysis demonstrates that low-down-payment borrowers can find affordable housing and good accessibility to down payment help in a wide variety of markets nationwide,” he said. “However, within many major metro areas the most affordable and accessible markets for low down payment buyers are often those furthest from jobs and other amenities that many buyers want.”

(Photo: Flickr/The Comedian)