Nearly 60% of Households Now Can Afford to Buy

The percentage of households that could afford to buy an entry-level home in California stood at 59 percent in the fourth quarter of 2008, compared with 33 percent for the same period in 2008, according to a report released Wednesday by the California Association of Realtors.

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 minimum household income needed to purchase an entry-level home at $248,030 in California during the fourth quarter of 2008 was $48,900, based on an adjustable interest rate of 6.02 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 $1,630 for the fourth quarter of 2008.

The minimum qualifying income of $48,900 was 42 percent lower than a year earlier when households needed $83,700 to qualify for a loan on an entry-level hold.

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 $59,160. The High Desert region was the most affordable area in the state with an index of 76 percent.

The San Luis Obispo County region was the least affordable in the state at 44 percent, followed by the Los Angeles County region at 46 percent. Historical affordability data can be found at www.car.org/economics/marketdata/ftbhai/.