Two Bay Area Counties Top State’s List of Least-Affordable Housing Markets

The number of Californians who could afford to purchase a median-priced home dropped sharply on an annual basis, a new report shows. And in what will come as little surprise to anyone shopping for a home in the Bay Area, two of our local counties rank as the state’s least affordable.empty_Pockets

According to the California Association of Realtors First Quarter Housing Affordability Index, 33 percent of state residents could afford the $416,720 median single-family home price in the first quarter of 2014. Affordability across California has shrunk by 11 percent on an annual basis and is down 23 percent from peak levels observed in the first quarter of 2012.

Affordability was even lower across the nine-county Bay Area, with only 22 percent of residents meeting the minimum income requirements to purchase a median-priced home of $679,800. The Bay Area’s affordability rate is down 10 percent from the first quarter of 2013.

CAR’s data ranks San Mateo County as the least-affordable housing market in the state, with just 12 percent of residents able to purchase a home. Not far behind was San Francisco, where 14 percent of residents earned enough money to buy a house.

In fact, the only Bay Area county where homes were more affordable than the state average was Solano County, which saw some of the largest annual affordability declines in California.

CAR says double-digit home price appreciation throughout the state last year and steadily rising interest rates have caused both the minimum-income requirement and the typical mortgage payment to jump by more than 50 percent over the past two years.

Currently the average Californian needs to earn about $86,000 per year to afford a home, a 53 percent increase from the first quarter of 2012. Assuming a 20 percent down payment and a 30-year fixed-rate mortgage using a composite interest rate of 4.46, the average state homebuyer would be responsible for a monthly payment of $2,160, including insurance and taxes.

In the Bay Area, homebuyers are required to pull down about $141,000 to afford a median-priced home, a 56 percent spike from the first quarter of 2012. The Bay Area is the only region included in CAR’s report where the minimum-income requirement topped six figures, while San Mateo and Marin counties are the only ones in the state where buyers need to earn more than $200,000 per year.

Buyers in our region can also expect to fork over heftier monthly payments than those in other parts of California. In the first quarter, the average Bay Area homebuyer was on the hook for about a $3,500 monthly mortgage payment, 56 percent higher than two years ago. Buyers in San Mateo and Marin counties had the state’s highest average monthly mortgage payments, at more than $5,000.

(Photo: Flickr/Dan Moyle)

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