California saw some improvement in affordable housing at the beginning of the year, according to a report released Monday by industry group the California Association of Realtors.
The housing affordability index shows the percent of households in California who could manage to buy a median-priced home during the first quarter of the year, which saw a 4 percent increase from last year’s fourth quarter at 30 percent, said CAR’s senior economist Oscar Wei.
Although it may not seem like a significant number, Wei told KPCC that it's actually a good sign. A normal percentage bump usually ranges from 1 to 2 percent, he said.
A median-priced home for California is $465,280, according to the report, which means that home buyers needed to earn a minimum annual income of $92,571 to qualify for that purchase.
Higher wages and lower seasonal home prices are the reason for the increased affordability, according to the report. California’s housing affordability index reached its peak of 56 percent in the first quarter of 2012.
Home prices tend to dip in the first quarter of every year, he said — it was at 34 percent during the same time last year — and have a habit of rising toward the middle of the year.
Families with a larger household size including children typically move during these periods, Wei said, which drives up the home prices.
“When we talk about housing affordability, a lot of the time, we look at the headline number, which is the state number… but we have to look at different counties as well,” he told KPCC.
When families can’t afford homes in areas like Orange County, Wei said, they start looking in the surrounding areas such as Riverside and San Bernardino counties, which ranked as one of the most affordable counties in California at 57 percent.
San Francisco County was the least affordable at 13 percent, according to the report.
Los Angeles County also saw a 4 percent increase from last year’s fourth quarter when it was at 27 percent, he said.
“We are seeing a little bit of uptake in housing affordability,” he said.
This is due to job growth, specifically in the construction industry, Wei said. This will create more supply for the demand and help alleviate the pressure on rising home prices.
This, in addition to low interest rates — which he predicts will soon inflate — make it the perfect climate for potential home buyers, Wei said.