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California home prices rise

LOS ANGELES – Rising home prices offset lower interest rates, reducing housing affordability in California during 2012's third quarter, the California Association of Realtors (CAR) reported this week.

The percentage of homebuyers who could afford to purchase a median-priced, existing single-family home in California fell to 49 percent in the third quarter of 2012, down from 51 percent in second-quarter 2012 and from 51 percent in third-quarter 2011, according to CAR's Traditional Housing Affordability Index (HAI).

In San Diego County in 2012's third quarter, 43 percent of homebuyers could afford to purchase a median-priced, existing single-family home, down from 44 percent in the second quarter, but up from 42 percent in 2011's third quarter.

The 43 percent qualifying in San Diego needed a minimum annual income of $76,370 to cover a monthly payment that included taxes and insurance of $1,910 for a median-priced home of $394,390.

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

Homebuyers needed to earn a minimum annual income of $65,810 to qualify for the purchase of a $339,860 statewide median-priced, existing single-family home in the third quarter of 2012.

The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,650, assuming a 20 percent down payment and an effective composite interest rate of 3.72 percent.

The effective composite interest rate in second-quarter 2012 was 3.92 percent and 4.63 percent in the third quarter of 2011.

Every Southern California county experienced lower affordability than the previous quarter because of higher home prices, while affordability improved or was stable in most San Francisco Bay Area counties.

At an index of 77 percent, San Bernardino and Solano counties were the state's most affordable counties.

Conversely, San Mateo County was the least affordable, with only 24 percent of households able to purchase the county's median-priced home.

In the Inland Empire counties of Riverside and San Bernardino, 68 percent of homebuyers qualified to purchase a home in the third quarter of 2012, down from 70 percent in the second quarter and 69 percent in 2011's third quarter.

The 68 percent that qualified in the Inland Empire needed a minimum annual income of $37,550 to cover a monthly payment that included taxes and insurance of $940 for a median-priced home of $193,190.

In neighboring Orange County, 34 percent of homebuyers qualified for a median-priced single-family home in the third quarter of 2012, down from 35 percent in the second quarter, but up from 33 percent in the third quarter of 2011.

The 34 percent that qualified in Orange County needed minimum qualifying income of $108,510 to pay the $2,710 monthly mortgage, taxes and insurance needed to buy a $560,320 median priced home.

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