California Housing Affordability Update – Q2-2019 Traditional Affordability Index

Housing affordability peaked at Q2-2012 California, 1984-2019 Annual Quarterly C.A.R.’s traditional Housing Affordability Index (HAI) was replaced with the First-Time Buyer Housing Affordability Index (FTB-HAI) in 2006. Note this slide takes the average of the 3 months in each of the quarters. C.A.R. began producing its Housing Affordability Index (HAI) in 1984. At that time, fixed-rate mortgages were the prevailing form of financing a home purchase, while the calculations used to produce the HAI reflected a 20 percent down payment. The methodology also assumed a monthly payment for principal, interest, taxes and insurance that was no more than 30 percent of a household’s income. In the more than two decades since the CALIFORNIA ASSOCIATION OF REALTORS® first conceived the HAI, the mortgage finance landscape has changed dramatically. The range of mortgage products available to buyers as well as underwriting criteria has changed. C.A.R. developed the new index measuring affordability for first-time home buyers to better reflect the realities of today’s real estate market. SERIES: Housing Affordability Index of Traditional Buyers SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Housing Affordability – Traditional Index California: 2006-2019 C.A.R. began producing its Housing Affordability Index (HAI) in 1984. At that time, fixed-rate mortgages were the prevailing form of financing a home purchase, while the calculations used to produce the HAI reflected a 20 percent down payment. The methodology also assumed a monthly payment for principal, interest, taxes and insurance that was no more than 30 percent of a household’s income. In the more than two decades since the CALIFORNIA ASSOCIATION OF REALTORS® first conceived the HAI, the mortgage finance landscape has changed dramatically. The range of mortgage products available to buyers as well as underwriting criteria has changed. C.A.R. developed the new index measuring affordability for first-time home buyers to better reflect the realities of today’s real estate market. SERIES: Housing Affordability Index of Traditional Buyers SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Affordability Peak vs. Current HAI Peak vs. Current SERIES: Housing Affordability Index of Traditional Buyers SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Minimum Annual Income Required During Affordability Peak vs. Current Region 2012 Q1 2019 Q2 % CHG CA SFH $56,320 $122,960 118.3% CA Condo/Townhomes $44,440 $95,960 115.9% Los Angeles Metropolitan Area $53,780 $109,090 102.8% Inland Empire $35,170 $76,760 S.F. Bay Area $90,370 $197,970 119.1% US $32,000 $56,480 76.5% SERIES: Housing Affordability Index of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Minimum Annual Income Required – Current vs. Last Year Region 2018 Q2 2019 Q2 CHG. in $ CA SFH $126,490 $122,960 -$3,530 CA Condo/Townhomes $101,270 $95,960 -$5,310 Los Angeles Metropolitan Area $112,340 $109,090 -$3,250 Inland Empire $76,310 $76,760 $450 S.F. Bay Area $219,380 $197,970 -$21,410 US $57,020 $56,480 -$540 SERIES: Housing Affordability Index of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Monthly PITI During Affordability Peak vs. Current Region 2012 Q2 2019 Q2 % CHG CA SFH $1,410 $3,070 118.0% CA Condo/Townhomes $1,110 $2,400 116.1% Los Angeles Metropolitan Area $1,340 $2,730 103.5% Inland Empire $880 $1,920 118.1% S.F. Bay Area $2,260 $4,950 119.0% US $800 76.3% SERIES: Housing Affordability Index of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Monthly PITI – Current vs. Last Year Region 2018 Q2 2019 Q2 % CHG CA SFH $3,160 $3,070 -2.8% CA Condo/Townhomes $2,530 $2,400 -5.1% Los Angeles Metropolitan Area $2,810 $2,730 Inland Empire $1,910 $1,920 0.5% S.F. Bay Area $5,480 $4,950 -9.7% US $1,430 $1,410 -1.4% SERIES: Housing Affordability Index of Existing Detached Homes SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®

Housing Affordability in CA by county 2019-Q2: % able to purchase median-priced home SERIES: Housing Affordability Index of Traditional Buyers SOURCE: CALIFORNIA ASSOCIATION OF REALTORS®