The California Association of REALTORS® reports the percentage of households that could afford to buy an entry-level home in California stood at 24 percent in the third quarter of 2007, unchanged from the same period a year ago, but affordability on the Peninsula and in Silicon Valley has become even more out of reach.
C.A.R. reported the First-time Buyer Housing Affordability Index for Santa Clara County dropped to 21 percent in the third quarter of 2007, from 26 percent in the third quarter of 2006. The index measures the percentage of households that can afford to purchase an entry-level home in California.
The minimum household income needed to purchase an entry-level home at $482,910 in California in the third quarter of 2007 was $99,590, based on an adjustable interest rate of 6.56 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 $3,320.
In Santa Clara County, the minimum household income needed to purchase an entry-level home at a first-time buyer median price of $724,630 was $149,437. The monthly payment including taxes and insurance was $4,981.
Concern about the affordability of housing is the reason why the Silicon Valley Association of REALTORS® (SILVAR) continues to work with C.A.R. to urge elected officials in Washington to act on increasing all federal loan limits for California, according to the presidents of both trade associations.
While Realtors continue to work to make housing more affordable, SILVAR President Mark Burns acknowledged homes in California will always be higher priced than other places in the country, and this is especially true for homes located on the Peninsula and in Silicon Valley "because of great schools, superb commute location, and a reasonable mix of shopping and services within a few blocks in every direction."
For those hesitant to take the plunge, Burns advised, "Be prudent, but get off the fence and buy. You buy a home because you want a place to call your own. A place close to work or good schools, or is an easy commute to the airport. Everyone wants a home, but so many are spooked by the credit crunch headlines we see in the news these days. Rates are declining. That is good news, but it doesn't matter that much. You can always refinance if they dip some more. And if they go up, you can pat yourself on the back for having a good rate. But you can't refinance a house you don't own."
"There is no magic formula," Burns noted "Just being careful, conservative, and realizing that what you like about Silicon Valley will be the reason why others will continue to come here. The opportunities abound. There's a reason why California is the sixth largest economy in the world. Enjoy it and go with the flow."
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.