Canyon News
California Housing Affordability Drops
By Colleen Park
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.

This lower 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 and Marin.

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.