RISMEDIA, February 20, 2009-The percentage of households that could afford to buy an entry-level home in California stood at 59% in the fourth quarter of 2008, compared with 33% for the same period a year ago, according to a report released this week by the California Association Of Realtors® (C.A.R.).
According to the Association, C.A.R.’s First Time Buyer Housing Affordability Index (FTB-HAI) measures the percentage of households that can afford to purchase an entry-level home in California. C.A.R. also reports first-time buyer indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being for first-time buyers in the state.
The minimum household income needed to purchase an entry-level home at $248,030 in California in the fourth quarter of 2008 was $48,900, based on an adjustable interest rate of 6.02% and assuming a 10% down payment. First-time buyers typically purchase a home equal to 85% of the prevailing median price. The monthly payment including taxes and insurance was $1,630 for the fourth quarter of 2008.
At $48,900, the minimum qualifying income was 42% lower than a year earlier when households needed $83,700 to qualify for a loan on an entry-level hold. Recent decreases in home prices and mortgage rates have brought affordability into better alignment with income levels of the typical California households, where the median household income is $59,160.
At 76%, the High Desert region was the most affordable area in the state. The San Luis Obispo County region was the least affordable in the state at 44%, followed by the Los Angeles County region at 46%.
The First-Time Buyer Housing Affordability Index also rose 6 percentage points in the fourth quarter of this year compared with the third quarter of 2008, due to a 14.1% decrease in the entry-level median home price.
For more information, visit www.car.org.