Entry-Level Housing Affordability Reaches 67 Percent in Second Quarter of 2009
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Entry-Level Housing Affordability Reaches 67% in Second Quarter of 2009
August 22, 2009-The percentage of households that could afford to buy an entry-level home in California stood at 67% in the second quarter of 2009, compared with 49% (revised) for the same period a year ago, according to a report recently released by the California Association of Realtors® (C.A.R.).
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 $224,180 in California in the second quarter of 2009 was $39,930, based on an adjustable interest rate of 4.92% 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 $1,330 for the second quarter of 2009.
At $39,930, the minimum qualifying income was 34% 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 of the typical California households, where the median household income is $61,030.
The First-time Buyer Housing Affordability Index declined 2 percentage points in the second quarter of this year compared with the first quarter of 2009, due to a 6.4% increase in the price of an entry-level home.
At 86%, 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 50%, followed by the Orange County region at 53%.
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