Affordability hit historic high in 2009 By Sara Sutachan, Senior Research Analyst
In the third quarter of 2009, nearly two-thirds (64 percent) of California’s households could afford a home at an entry-level price of $247,150. The monthly mortgage payment including interest, taxes, and insurance (PITI)—based on a 10 percent downpayment and the prevailing mortgage rate of 4.79 percent—added up to $1,450. That is $340 less when compared to a year ago, when the entry-level home was priced at $290,490, the mortgage rate was 5.30 percent, and the monthly (PITI) was $1,790. The First-time Buyer Affordability Index is 9 points higher than the third quarter of 2008 when only 55 percent of the households were able to afford a home. While this affordability index only goes back to 2000, other affordability measures indicate that affordability has been at a historically high level in 2009 even compared to the 1980s and 1990s.
Lower prices and mortgage rates have bumped more than 1.1 million households in California above the affordability threshold compared to a year ago. However, even as improved affordability is a positive development for the California housing market, qualifying for a home loan remains a problem and a challenge for homeownership across the state. For more information on C.A.R.’s First-Time Buyer Housing Affordability Index & Methodology click here:
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