California Housing Affordability Drops
Posted by Colleen Park on Aug 17, 2012 - 9:25:36 PM
California Association Of Realtors news release from August 10. The index shows affordability percentages for the last three quarters.
LOS ANGELES—California housing affordability has taken its
customary dip during the second quarter of 2012, from 56% in the first quarter
to 51% in the second quarter as a result of rising home prices. The statistics
were released last week from the California Association Of Realtors.
percentage corresponds to the statistics from the second quarter of 2011 and is
higher than the 46% from the second quarter of 2010. Affordability in the Los Angeles Metropolitan Area dropped 3%,
from 56% in the first quarter to 53% in second quarter.
A larger negative
percentage change of 10% came from the San Francisco Bay Area, in a region with
some of the least affordable cities in California such as San Francisco itself
The measurement for affordability, as calculated by the
California Association of Realtors, determines the percentage of all households
that would be able to “purchase a median-priced, single-family home” based on
their annual income, according to the news release. In this case, a median-priced,
existing single-family home is $316,230 statewide, and the minimum annual
income to purchase at that price is $62,390. In the L.A. Metro area, the median
price drops to $292,430 and minimum annual income to $57,700.
Although the California Association of Realtors release does
not include any commentary on what this means regarding the housing economy, the
Allen Matkins UCLA Anderson Forecast for Summer/Fall 2012 mentioned “most
encouraging news” in a June survey of multi-family housing developers. As the forecast
notes “the survey indicates that the market outlook is sufficiently bright for
70% of our panel or their associates to begin new multi-family projects in the
coming 12 months.”
The multi-family housing survey is studied separately from
the single-family home calculations, but the forecast referred to pricing
movements in the same areas. Rents in San Francisco “increase at double-digit
rates”¦has given rise to a number of new building projects.” Los Angeles has
also seen a rise in new construction projects in Hollywood and Santa Monica,
though rental rates have risen at a slower rate than in San Francisco.
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