Significantly higher home prices shut out more California home buyers during the quarter, CAR said.
The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California dropped to 32% in the third quarter, down from 36% in first quarter of the year and from 49% in third quarter of 2012.
CAR's Traditional Housing Affordability Index (HAI) showed the third quarter 2013 figure fell below 35% for the first time since the third quarter of 2008.
CAR's 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. The Index is considered the most fundamental measure of housing well-being for home buyers in the state.
Home buyers needed to earn a minimum annual income of $89,170 to qualify for the purchase of a $433,940 statewide median-priced, existing single-family home in the third quarter of 2013. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,230, assuming a 20% down payment and an effective composite interest rate of 4.36%. The effective composite interest rate in second-quarter 2013 was 3.64% and 3.72% in the third quarter of 2012.
The median home price was $339,930 in third-quarter 2012, and an annual income of $65,828 was needed to purchase a home at that price.
California housing affordability hit a record high of 56% in first quarter of 2012. Since then, a lack of housing supply and high demand have driven up home prices sharply and significantly reduced affordability.
Nearly every county experienced a double-digit decline in affordability when compared to last year, reflecting the substantial increase in California home prices on a year-to-year basis. Sacramento, Monterey and Sonoma counties experienced the largest year-to-year declines, while San Mateo, Marin and San Francisco counties experienced the smallest year-to-year declines.
At an index of 64%, San Bernardino County was the most affordable county of the state, while San Mateo County was the least affordable at 15%.