What passes as a measure of home affordability in California may stagger some who live in other parts of the country and only about a third of the households in the state can meet the affordability test, but at least that number stopped falling in the fourth quarter of 2013.  The California Association of Realtors® (C.A.R.) reports that its Traditional Housing Affordability Index (HAI) has stabilized and remained relatively unchanged from the third to the fourth quarter.  This followed six straight quarters of declines. 

At the end of the quarter the index stood at 32, meaning that 32 percent of home buyers in the state could afford to purchase a median-priced, existing single-family home in California.  The index stood at 48 percent in the fourth quarter of 2012.  The index for the entire United States is 56 percent, down from 58 percent in the third quarter and 69 percent one year ago.

Home buyers needed to earn a minimum annual income of $89,240 to qualify for the purchase of a $431,510 statewide median-priced, existing single-family home.  The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $2,230, assuming a 20 percent down payment and an effective composite interest rate of 4.43 percent.  The median home price was $352,450 in fourth-quarter 2012, and an annual income of $66,860 was needed to purchase a home at that price.

California housing affordability hit a record high of 56 percent in first quarter of 2012 but has steadily declined since then, as a lack of housing supply and high demand drove up home prices sharply and significantly reduced affordability. 

San Mateo at 15 percent and San Francisco at 16 percent were the least affordable areas in the state, followed by Santa Barbara (17 percent) and Santa Cruz (18 percent).  The HAI was highest in San Bernardino (64 percent), Kings County and Medera (both 62 percent) and Tulare (61 percent.)