Entry-level housing affordability increases to 59 percent

Entry-level housing affordability increases to 59 percent

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For release:
Wednesday, Feb. 18, 2009

C.A.R. reports entry-level housing affordability increases to 59 percent

LOS ANGELES (Feb. 18) 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 a year ago, according to a report released today 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 $248,030 in California in 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.

At $48,900, the minimum qualifying income was 42 percent lower than a year earlier when households needed $83,700 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 $59,160.

At 76 percent, 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 44 percent, followed by the Los Angeles County region at 46 percent.

The First-Time Buyer Housing Affordability Index also rose 6 percentage points in the fourth quarter of this year compared with the third quarter of 2008, due to a 14.1 percent decrease in the entry-level median home price.

Historical affordability data can be found at http://www.car.org/economics/marketdata/ftbhai/.

Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 180,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

C.A.R. Region	Q4 2008	Q3 2008		Q4 2007
California	59	53		33
California - Condos	65	58	r	41
United States	72	68		65
High Desert	76	73		54
Los Angeles County	46	42		27
Monterey Region	58	51		21
Northern California	56	53	r	44
Northern Wine Country	53	49		33
Orange County	48	43		27
Palm Sprgs/Lwr Desert	65	59		38
Riverside/SBernardino	70	66		45
Sacramento County	74	71		53
San Diego County	56	51		31
San Francisco Bay	47	35		23
San Luis Obispo County	44	38		28
Santa Barbara Area	55	45		21
Santa Clara County	49	39		24
Southern California	58	52		32
Ventura County	58	50	\	31
County	\	\	\	\
Alameda	48	39		27
Contra Costa	35	30		22
Fresno	70	65		47
Marin	29	24		22
Merced	79	75		51
Riverside	71	66		41
San Bernardino	70	68		46
San Francisco	30	26		20
San Mateo	37	29		19
Santa Cruz	43	33		22
Sonoma	56	52		36

* -- percentage of California households that can afford to purchase a median-priced home

r – revised

Source: CALIFORNIA ASSOCIATION OF REALTORS®

C.A.R. Region	Housing Affordability Index	Entry-Level Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
California	59	$248,030	$1,630	$48,900
California - Condos	65	$210,830	$1,380	$41,400
United States	72	$153,090	$1,000	$30,000
High Desert	76	$125,080	$820	$24,600
Los Angeles County	46	$301,110	$1,970	$59,100
Monterey Region	58	$265,700	$1,740	$52,200
Northern California	56	$241,410	$1,580	$47,400
Northern Wine Country	53	$300,890	$1,970	$59,100
Orange County	48	$395,100	$2,590	$77,700
Palm Sprgs/Lwr Desert	65	$159,310	$1,040	$31,200
Riverside/SBernardino	70	$171,060	$1,120	$33,600
Sacramento County	74	$159,750	$1,050	$31,500
San Diego County	56	$282,910	$1,860	$55,800
San Francisco Bay	47	$414,070	$2,720	$81,600
San Luis Obispo County	44	$317,330	$2,080	$62,400
Santa Barbara Area	55	$269,380	$1,770	$53,100
Santa Clara County	49	$446,250	$2,930	$87,900
Southern California	58	$248,380	$1,630	$48,900
Ventura County	58	$333,480	$2,190	$65,700
County	\	\	\	\
Alameda	48	$369,050	$2,420	$72,600
Contra Costa	35	$540,050	$3,540	$106,200
Fresno	70	$140,000	$920	$27,600
Marin	29	$709,420	$4,650	$139,500
Merced	79	$101,850	$670	$20,100
Riverside	71	$168,640	$1,110	$33,300
San Bernardino	70	$166,540	$1,090	$32,700
San Francisco	30	$570,660	$3,740	$112,200
San Mateo	37	$559,300	$3,670	$110,100
Santa Cruz	43	$391,000	$2,560	$76,800
Sonoma	56	$295,600	$1,940	$58,200

Source: CALIFORNIA ASSOCIATION OF REALTORS®

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