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REALTOR®: Entry-level Housing Affordability in California Reaches 67 percent

Wednesday, August 19, 2009

Housing affordability improved in the state of California during the second quarter of this year in comparison to the same period last year. The percentage of households that could afford to buy an entry-level home in California stood at 67 percent in the second quarter of 2009, compared with 49 percent for the same period a year ago, according to a report released by the California Association of REALTORS® (C.A.R.).

C.A.R.'s First-time Buyer Housing Affordability Index measures the percentage of households that can afford to purchase an entry-level home in California. The C.A.R. report states the minimum household income needed to purchase an entry-level home at $224,180 in California in the second quarter of 2009 was $39,930, based on an adjustable interest rate of 4.92 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 $1,330 for the second quarter of 2009. At $39,930, the minimum qualifying income was 34 percent lower than a year earlier when households needed $60,460 to qualify for a loan on an entry-level home.

"Recent decreases in home prices and mortgage rates have brought affordability into better alignment with income levels," said Julia Truesdale Keady, president of the Silicon Valley Association of REALTORS®.

While slightly higher than last quarter's 62 percent, the affordability index has shown much improvement from previous years. In Santa Clara County, the percentage of households that could afford to buy an entry-level home in the second quarter of 2009 stood at 58 percent, compared with 34 percent during the same period last year. The minimum household income needed to purchase an entry-level home priced at a median $425,000 in Santa Clara County was $75,710. The monthly payment including taxes and insurance was $2,520 for the second quarter of 2009.

"Home buyers are really in a very good position to take advantage of today's market conditions," said Julia Truesdale Keady, president of the Silicon Valley Association of REALTORS®. "

Keady, who is a REALTOR® with Alain Pinel Realtors in Palo Alto, reminds first-time home buyers that the $8,000 first-time buyer tax credit program ends in just three short months.

"Buyers would need to be closed on their homes by November 30th to receive the tax break," Keady said. "Keep in mind it's typically 45-60 days to close on a traditional real estate transaction. If you want to take advantage of the home buyer tax credit, I urge you to discuss your plans with a REALTOR® now."



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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