Real Estate News

Only 1 in 3 can afford median-priced California home; situation better in Sacramento

Loss of longtime home 'devastating,' couple says

John and Norma Cranshaw took out a subprime loan on their south Sacramento home in 2006 and later lost it to foreclosure. “They said they would be there to help us,” said John Cranshaw, 69. “Once they got the money, they were gone.”
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John and Norma Cranshaw took out a subprime loan on their south Sacramento home in 2006 and later lost it to foreclosure. “They said they would be there to help us,” said John Cranshaw, 69. “Once they got the money, they were gone.”

Only 32 percent of California households could afford to purchase the $496,620 median-priced Golden State home in the first quarter of 2017, according to a report issued Monday by the Los Angeles-based California Association of Realtors.

That marked the 16th consecutive quarter that the index has been below 40 percent and is near the mid-2008 low level of 29 percent.

In this year’s first quarter, CAR said a minimum annual income of $102,050 was needed to make monthly payments of $2,550 – including principal, interest and taxes – on a 30-year fixed-rate mortgage at a 4.36 percent interest rate for a median-priced home in the state.

In the first quarter of 2016, CAR said the affordability index stood at 34 percent, and the median home price was $465,280. At that time, an annual income of $92,570 was needed to make monthly payments of $2,310.

By comparison, California’s housing affordability index hit a peak of 56 percent in the fourth quarter of 2012, a time when median home prices were at a post-recession low.

Prospective homebuyers saw a better situation in Sacramento County in this year’s first quarter.

CAR said 46 percent of households could afford to purchase a median-priced home of $319,720 in Sacramento County. The association said that would require monthly payments of $1,640 and minimum qualifying income of $65,700.

San Francisco County ranked as the state’s toughest market to start the year. CAR said only 13 percent could afford the $1.3 million median, with minimum qualifying annual income of $267,130.

The association said 40 percent of California homebuyers were able to purchase the $414,940 median-priced condo or townhome in the state. An annual income of $85,270 was required to make a monthly payment of $2,130.

Students from regional high schools and youth programs compete in the 31st annual Design Build Competition, where they build tiny structures from scratch in the parking lot of Cosumnes River College today and tomorrow.

Mark Glover: 916-321-1184, @markhglover

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