The California Association of REALTORS® reports the percentage of households that could afford to buy an entry-level home in the state stood at 44 percent in the first quarter of 2008, compared with 26 percent for the same period a year ago.
The minimum household income needed to purchase an entry-level home at
$356,350 in California in the first quarter of 2008 was $67,830, based on an adjustable interest rate of 5.65 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 $2,260
for the first quarter of 2008.
At $67,830, the minimum qualifying income was 30 percent lower than a year earlier when households needed $96,500 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 of the typical California
household, where the median household income was $50,700.
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 Index is the most fundamental measure of housing
well-being for first-time buyers in the state.
The percentage of households that could afford to buy an entry-level home in Santa Clara County increased to 31 percent during the first quarter of this year, compared with 27 percent at the same period a year ago. The affordability index was up 7 percent from the fourth quarter of 2007. The minimum household income needed to purchase an entry-level home at $663,000 in Santa Clara County in the first quarter of 2008 was $126,200, based on an adjustable interest rate of 5.65 percent and assuming a 10 percent down payment. The monthly payment, including taxes and insurance, was $4,210 for the first quarter of 2008.
According to Leannah Hunt, president of the Silicon Valley Association of REALTORS®, in addition to the decrease in the mortgage rate and entry-level median home price, the increase in conforming loan limits and relaxation of FHA requirements will help first-time homebuyers.
"Our association is pushing to make the temporary increases to the conforming loan limits permanent," said Hunt. "If this happens and legislation to improve FHA programs and Fannie Mae and Freddie Mac regulation passes, this will strengthen the housing market and make housing more affordable, especially for families living in high-cost areas like California."
At 64 percent, Sacramento County and the High Desert region were the most affordable areas in the state. Monterey was the least affordable area in the state
at 29 percent, followed by the San Francisco Bay Area at 30 percent.
In a separate report, the National Association of Homebuilders indicates seven of the 10 least affordable housing markets in the nation during the first quarter are in California, while metro areas in Ohio and Michigan account for seven of the nation's most affordable metro areas. The NAH report states Los Angeles remained the least affordable housing market with a population above 500,000 for the 14th consecutive quarter in first-quarter 2008.
Los Angeles was followed by New York City; San Francisco; Salinas; San Luis Obispo, Calif.; Napa, Calif.; Miami; Sana Ana, Calif.; Santa Barbara, Calif.; and Nassau, N.Y., as the least affordable metro areas in the nation, according to the index report. Kokomo, where an estimated 95.3 percent of homes were considered affordable to median-income families in first-quarter 2008, was followed by Lima, Ohio; Cumberland, Md.-W.V.; Lansing, Mich; Springfield, Ohio; Battle Creek, Mich.; Wheeling, W.V.-Ohio; Bay City, Mich.; Indianapolis; and Monroe, Mich., as the top-10 most affordable metro areas in the nation.
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 email or call the SILVAR office at (408) 200-0100.