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)

Home Sellers Are Ready to Buy Again in 2014

The year 2013 was the year of the homebuyer, marked by multiple offers for virtually every desirable property on the market in Northern California. Bidding wars frequently pushed sales prices 10 to 15 percent above list.

Illustration of a person in front of a for-sale sign

But 2014 is shaping up to be the year of the seller.

After regaining equity in their homes last year, sellers are eager to get back into the market again, according to a recent survey by the California Association of Realtors (CAR).

More than two-thirds (69 percent) of home sellers purchased another home rather than renting after selling their previous residence in 2013, up from 47 percent in 2012 and only 12 percent in 2011.

“Much-improved housing market conditions in the last year have given sellers more confidence to own a home rather than to rent one,” CAR President Kevin Brown said in a statement accompanying the survey results. “With sellers being more positive about the future of home prices, the vast majority of sellers who are currently renting plan to buy again in the future.

“In fact, 70 percent of sellers who are currently renting said they would purchase another home, up from 22 percent in 2012.”

Sellers are more optimistic about repurchasing a home thanks to strong growth in home prices, record-low interest rates, and better financial situations at home, according to the CAR survey.

The reasons for selling changed significantly in just one year. In 2012, the majority of sellers sold primarily because of financial difficulties, but as home prices surged, a desire to trade up became the top reason for selling in 2013.

Others wanted to take advantage of low interest rates to finance their next home, while some sellers believed the price of their home had peaked and wanted to cash out.

Those survey results bode well for 2014, as more homeowners put their properties on the market and help to meet the demand of homebuyers — both first-time and move-up buyers.

 

Source: Pacific Union blog

(Image: Flickr/Scott Maxwell)

San Francisco ranking as the Third least affordable City in the World

SAN FRANCISCO, SAN JOSE RANK HIGH ON WORLD’S LEAST-AFFORDABLE LIST
If you’re looking to stretch your housing dollar to the maximum, the City by the Bay might not be your best bet: One recent study ranks San Francisco as the least-affordable city in the country and the third least affordable in the world.planetearth

According to the 10th Annual Demographia International Housing Affordability Survey: 2014, San Francisco trails only Hong Kong and Vancouver, British Columbia as the least-affordable of 360 world cities included in the study. The survey ranks cities’ affordability (or lack thereof) based on the “median multiple”: the ratio of median home price to median household income.

Demographia’s survey rates any city with a median multiple greater than 5.1 as “severely unaffordable.” San Francisco drew a median multiple of 9.2, while San Jose – ranked as the fifth least-affordable city in the world – came in with an 8.7.

Four of the survey’s 10 priciest cities in the world are located in California, with Los Angeles and San Diego also making the list.

 

Source: Pacific Union blog