Lower home prices and record-low interest rates in the third quarter of 2011 contributed to an improvement in housing affordability for California home buyers, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

The percentage of home buyers who could afford to purchase a median-priced, existing single-family home in California rose to 52 percent in the third quarter of 2011, up from 51 percent in second-quarter 2011 and was up from 46 percent in the third quarter of 2010, according to C.A.R.’s Traditional Housing Affordability Index (HAI).

C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California.  C.A.R. 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.

“While housing affordability has improved in most areas of the state, would-be buyers, especially first-timers, are having difficulty getting loans,” said C.A.R. President Beth L. Peerce.  “When affordability is high, first-time buyers typically make up a large share of the market, such as in the mid-90s, when first-timers made up half of the market.  First-timers have made up just a third of the market this year, illustrating the hurdles many home buyers are experiencing in qualifying for a home loan.”

Home buyers needed to earn a minimum annual income of $61,530 to qualify for the purchase of a $292,120 statewide median-priced, existing single-family home in the third quarter of 2011.  The monthly payment, including taxes and insurance, would be $1,540, assuming a 20 percent down payment and an effective composite interest rate of 4.63 percent.  The effective composite interest rate in second-quarter 2011 was 4.85 percent and 4.78 percent in the third quarter of 2010.

Regionally, housing affordability rose in most counties in the San Francisco Bay Area but was down in Los Angeles County and Fresno County.  At 77 percent, San Bernardino County was the most affordable, while San Mateo County was the least affordable, with only 25 percent of households able to purchase the county’s median-priced home.

Visit http://www.car.org/marketdata/data/haitraditional/ to see C.A.R.’s historical housing affordability data.  For first-time buyer housing affordability data, visit http://www.car.org/marketdata/data/ftbhai/.

CALIFORNIA ASSOCIATION OF REALTORS® Traditional Housing Affordability Index

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*   Los Angeles Metropolitan Area is a five-county region that includes Los Angeles County, Orange County, Riverside County, San Bernardino County, and Ventura County **  Inland Empire includes Riverside County and San Bernardino County ***S.F. Bay Area has been redefined to include the following counties: Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano, and Sonoma

CALIFORNIA ASSOCIATION OF REALTORS® Traditional Housing Affordability Index