The California Association of Realtors [1] (CAR) released its Traditional Housing Affordability Index (HAI) on Wednesday, revealing declining levels of affordability in the Golden State.
The CAR reported only 32 percent of home buyers could afford to purchase a median-priced, existing single-family home in California. The report noted a gradual slowing of home prices in the fourth quarter of 2013, helping affordability.
The Index is considered the most fundamental measure of housing well-being for home buyers in the state.
The median home price for California was $431,510 in Q4 2013. The figure represents an increase from Q4 2012, where the median price for a home was $352,450.
To purchase a median-priced home in California, homebuyers needed to earn a minimum annual income of $89,240. Compared to 2012, where homebuyers needed to earn an income of $66,860, affordability of homes in California has declined for six consecutive quarters.
California housing affordability hit a record high of 56 percent in Q1 2012, but has steadily fallen. A lack of housing supply and high demand drove up home prices sharply and significantly reduced affordability.