Outlying Bay Area Counties See Sizable Annual Affordability Declines

Bay Area home shoppers who have been considering buying a property in one of our region’s more suburban communities might want to sit up and take notice, as affordability in some places has dropped significantly from last year due to increased competition and rising prices.empty_Pockets

According to the California Association of Realtors’ third-quarter housing affordability report and index, 24 percent of Sonoma County residents could afford to purchase the median-priced $565,790 home in the third quarter, down from 29 percent one year earlier. Affordability in Solano County also dropped by five percentage points, down from 49 percent in October 2014 to 44 percent this year.

Solano is currently the only Bay Area county in which residents who earn less than six figures can afford a home, with the minimum qualifying income at $73,020 in the third quarter. San Mateo and San Francisco counties homebuyers require the largest incomes in the state, at about a quarter-million dollars, as well as the largest monthly mortgage payments, at about $6,300 per month.

CAR says that Marin was the only Bay Area county to report a notable improvement in affordability, up to 19 percent in the third quarter compared with 15 percent one year earlier. The organization speculates that the gain is largely due to a combination flat home price growth and wage increases.

Elsewhere across the Bay Area, third-quarter affordability rates dropped on an annual basis by two percentage points in San Francisco, where currently 10 percent of residents meet minimum income requirements, making it California’s least-affordable county. The number of residents able to purchase a home also dropped on an annual basis in Alameda (to 20 percent), Contra Costa and Santa Clara (to 19 percent), and San Mateo counties (to 13 percent). Affordability in Napa County was unchanged from one year ago, at 21 percent.

Statewide, affordability was also unchanged in the third quarter year over year, with 29 percent of the population able to afford the median-priced $487,420 home, compared with 2012, when more than half of Californians could afford to purchase a home. The average Golden State household needs to earn just shy of six figures in order to afford the monthly mortgage payment of $2,460.

Across the nine-county Bay Area, affordability decreased, falling from 22 percent in the third quarter of 2014 to 20 percent this year. Residents need to pull in more than $160,000 per year to qualify for a home purchase, with monthly payments coming in at $4,080.

(Photo: Flickr/Dan Moyle)