MortgageReal Estate

Need a mortgage in California? Realtors say you better earn this much money

CAR gives regional and state affordability break down

While it’s only a small improvement, California still managed to record an increase in home affordability, according to the latest report from the California Association of Realtors.

However, a look at the different counties across the states shows that geographical location makes a difference, as seen in the chart at the end of the article.

So what percentage of income should be available to get a mortgage? Well, that depends on where the house is located

Overall, the latest Traditional Housing Affordability Index from CAR posted that the percentage of homebuyers who could afford to purchase a median-priced, existing single-family home in California in first-quarter 2017 inched up to 32%. Although this is up from 31% in the fourth quarter of 2016, it is down from 34% in the first quarter a year ago.

CAR noted that this is the 16th consecutive quarter that the index has been below 40% and is near the mid-2008 low level of 29%.

For perspective, California’s housing affordability index hit a peak of 56% in the fourth quarter of 2012.

The HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. CAR also reports affordability indices for regions and select counties within the state.

For the whole state, homebuyers needed to earn a minimum annual income of $102,050 to responsibly qualify for the purchase of a $496,620 statewide median-priced, existing single-family home in the first quarter of 2017. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $2,550, assuming a 20% down payment and an effective composite interest rate of 4.36%.

The minimum income needed to qualify for a loan on the median-priced home is calculated using the rule that the monthly payment for principal, interest, taxes and insurance can be no more than 30% of a household's income.

The chart below gives a breakdown of individual counties and regions.

Click to enlarge

house

(Source: CAR) 

Latest Articles

New-home sales show housing ready for rescue role

While other sectors of the economy are soft, housing is ready to play its traditional countercyclical role of leading the way out of a recession, said Robert Dietz, NAHB’s chief economist. HW+ Premium Content

Sep 24, 2020 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please