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California's Entry-level Housing Affordability at 64 percent in the Second Quarter of 2010

Wednesday, August 25, 2010

The percentage of households that could afford to buy an entry-level home in California stood at 64 percent in the second quarter of 2010, compared with 67 percent for the same period a year ago, according to a report released by the California Association of REALTORS®.

The state Realtor group's First-time Buyer Housing Affordability Index measures the percentage of households that can afford to purchase an entry-level home in California. 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 $266,750 in California in the second quarter of 2010 was $43,960, based on an adjustable effective interest rate of 4.09 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. The monthly payment, including taxes and insurance, was $1,470 for the second quarter of 2010. At $43,960, the minimum qualifying income was $4,051 greater than a year earlier when households needed $39,909 to qualify for a loan on an entry-level home.

In Santa Clara County 51 percent of households could afford to buy an entry-level home in the  second quarter of 2010, down from 55 percent the previous quarter and 58 percent the second quarter of 2009. The minimum household income needed to purchase an entry-level home at the median of $535,500 in the second quarter of this year was $88,250. The monthly payment, including taxes and insurance was $2,940 for this quarter. In the second quarter of 2009, the minimum household income needed to purchase an entry-level home at the median of $425,000 was $75,710, and the monthly payment was $2,520.

"Home values are improving, which is a good sign for homeowners. Buyers with stable jobs and good credit ratings are still in a favorable position, as mortgage interest rates continue to remain at record lows," said Jeff Bell, president of the Silicon Valley Association of REALTORS®. 

"The housing market is slowly recovering from the downturn, but we must remember that even as home values rise, homeownership should not be looked at solely as a way to make money," Bell added. "Buyers should not focus on quick appreciation when buying a home. Rather, homeownership is for the long-term. A home should be viewed as a stable and secure place to raise a family, to belong to a community."

The California Association of REALTORS® report indicated at 84 percent, 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 48 percent, followed by the San Francisco Bay region at 49 percent. 


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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