Housing affordability hits a decade low in Tulare County


California Association of Realtors says only 65% of households can afford an entry level home

By Reggie Ellis @Reggie_SGN

TULARE COUNTY – The number of families who can afford to buy a home in Tulare County is at a low for the decade since the housing market crashed. 

According to a report released earlier this month by the California Association of Realtors (CAR), Tulare County has seen one of the biggest drops in affordability compared to surrounding counties in the last year due to a combination of record home price increases and higher interest rates. Sixty-five percent of households could afford to purchase an entry level home in the second quarter of 2018, that’s down 2% from the first quarter of 2018 and down 4% from 2017. Tulare County was among nine Central Valley counties to see a decrease in housing affordability from a year ago (Fresno, Kern, Merced, Placer, Sacramento, San Benito, San Joaquin, Stanislaus and Tulare). Kings County remained unchanged and Madera County saw a 7% improvement. 

CAR’s Housing Affordability Index (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.

That doesn’t mean Tulare County isn’t affordable. Tulare’s median home price is still $198,050, with an average monthly mortgage payment of $1,060, lower than all of the surrounding counties and the fourth lowest in the state. CAR estimates that households making more than $31,000 can afford a home in Tulare County. 

Tulare County is still one of the most affordable counties in California, only trailing Madera (71%), Kings (70%), and Lassen (77%) Counties.

The Central Valley remains the most affordability region for housing statewide. Every county between Kern and Placer Counties is double the state average of 26% and close to the national average of 69%. Overall, nearly two-thirds (63%) of Valley households can afford a single-family home compared with 60% in the Inland Empire, less than half in Los Angeles area (48%) and just over one-third (34%) in the Bay Area.

Statewide, only 26% of California households could afford to purchase the $596,730 median-priced home in the second quarter of 2018, down from 31% in first-quarter 2018 and down from 29% a year ago. This is the 21st consecutive quarter that the index has been below 40 percent. California’s housing affordability index hit a peak of 56 percent in the second quarter of 2012.

A minimum annual income of $126,490 was needed to qualify for the purchase of a $596,730 statewide median-priced, existing single-family home in the second quarter of 2018. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, would be $3,160, assuming a 20 percent down payment and an effective composite interest rate of 4.70 percent. The effective composite interest rate in first-quarter 2018 was 4.44 percent and 4.09 percent in the second quarter of 2017.

Housing affordability for condominiums and townhomes also fell in second-quarter 2018 compared to the previous quarter with 36 percent of California households earning the minimum income to qualify for the purchase of a $477,790 median-priced condominium/townhome, down from 39 percent in the first quarter. An annual income of $101,270 was required to make monthly payments of $2,530.

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