The monthly average commitment rate for 30-Yearfixed rate mortgages reported by Freddie Mac, for example, was at 6.70 percent in July 2007, as
compared to 3.44 percent in July 2016. The difference in monthly mortgage payment between those rates at the statewide median price is $824, which is
substantial for most Californian households. Higher home prices across the state and regions account for most of the decline in affordability, as the
minimum annual income required to buy a medianpriced home in California grew to $101,220 in the second quarter. That’s an increase of $8,000 from the first quarter of 2016 and was $4,500 from the same quarter last year. The California median price continued to increase at a steady but moderate pace since the mid of 2014, averaging a 5.9 percent annual growth rate in the last
25 months. With mortgage rates dropping back to record low levels at the end of June, housing affordability was being kept from declining further in the first half of the year. But when interest rates start moving higher in the upcoming year, housing affordability will become more and more of an issue
until we figure out how to resolve the housing supply problem.