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The percentage of households in California able to afford a median-priced home stood at 24 percent in February, a 6-percentage-point decrease compared to the same period a year ago, when the housing affordability index was at 30 percent, according to a report released by the California Association of Realtors. The February housing affordability index improved one point compared to January, when it stood at 23 points.
The association's monthly housing affordability index measures the percentage of households that can afford to purchase a median-priced home in California. The association also reports housing affordability indexes for regions and select counties within the state. The index is the most fundamental measure of housing well-being in the state.
The minimum household income needed to purchase a median-priced home at $394,300 in California in February was $91,690, based on a typical 30-year, fixed-rate mortgage at 5.74 percent and assuming a 20 percent down payment. The minimum household income needed to purchase a median-priced home was up from $77,220 in February 2003, when the median price of a home was $326,640 and the prevailing interest rate was 5.93 percent.
The California affordability factor is even more significant when compared to national statistics, in which the minimum household income needed to purchase a median-priced home at $168,100 in the United States in February 2004 was $39,090.
To meet the challenges of increasing the housing supply and providing affordable homeownership options for more families in California, where fewer than one in four households can afford a median-priced home, the California Association of Realtors unveiled a 2004 legislative package that addresses the issue.
The 2004 legislative package includes four bills that will improve homeownership opportunities for renters, increase the supply of second units, reform the low- and moderate-income housing requirements in cities and counties and increase the flexibility and usefulness of the density-bonus law.
"Our legislation this year is another step in a concerted effort by California Realtors to confront and solve several components of the housing supply and affordability issues facing our state," said the association's president, Ann Pettijohn.
California Association of Realtorssponsored legislation in 2004 addressing housing supply and affordability issues includes:
* AB 2175 (Canciamilla) Condominium Conversion: Homeownership Opportunities for Tenants. This bill creates reasonable and practical standards for condominium conversions.
* AB 2348 (Mullin) Housing Element Reform. Existing law prescribes procedures for determining a city or county's share of low- and moderate-income housing needs.
* SB 1818 (Ducheny and Hollingsworth) Making the Density-Bonus Law Work. This bill will increase the flexibility and usefulness of the density-bonus law by halving the number of units that must be built for housing developers to receive a density bonus. The bill will also compel local governments to quantify their actual assistance payments to make the units affordable.
* AB 2702 (Steinberg) Ministerial Approval of Second Units. Enacted two decades ago; will specify that local governments cannot adopt ordinances that have the practical effect of barring second units from a community.
Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.silvar.org. Send questions on any topic to jnewton@jnpr.com.
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