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California entry-level affordability up in 3Q

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LOS ANGELES -- The percentage of households that could afford to buy an entry-level home in California stood at 64 percent in the third quarter of 2009, compared with 55 percent (revised) for the same period a year ago, according to a report 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.

In San Diego County, the C.A.R.'s FTB-HAI was at 56 percent for the third quarter of 2009, down from 59 percent in the second quarter, but higher than 51 percent in the third quarter of 2008.

San Diego County's entry-level price was $321,420, requiring a monthly payment of principal, taxes and insurance (PTI) of $1,890 and a minimum income of $56,700.

The minimum household income needed to purchase an entry-level home at $247,150 in California in the third quarter of 2009 was $43,500, based on an adjustable interest rate of 4.79 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 PTI payment was $1,450 for the third quarter of 2009.

At $43,500, the minimum qualifying income was 19 percent lower than a year ago when households needed $53,700 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 $61,030.

The First-time Buyer Housing Affordability Index declined 3 percentage points in the third quarter of this year compared with the second quarter of 2009, due to a 10.2 percent increase in the price of an entry-level home.

At 85 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 47 percent, followed by the San Francisco Bay region at 49 percent.

In the Inland Empire counties of Riverside/San Bernardino, the third quarter FTB-HAI was at 78 percent, down from 79 percent in the second quarter, but still higher than 68 percent in the third quarter 2008.

The entry-level price in the combined Inland Empire counties was $142,840, requiring a monthly PTI of $840 and a minimum income of $25,200.

Separately, Riverside's FTB HAI was 78 percent with an entry-level price of $147,780 requiring a minimum income of $26,000 to cover a monthly PTI of $870.

On its own, San Bernardino's FTB HAI was 81 percent on an entry-level price of $125,250 requiring a minimum income of $22,040 to cover a monthly PTI of 4730.

In neighboring Orange County, the third quarter 2009 FTB HAI was 51, down from 53 in the second quarter but still ahead of 46 in the third quarter of 2008.

The OC's entry-level price of $423,960 required a minimum income of $74,700 to cover a monthly PTI of $2,490.

Nationally, the third quarter FTB HAI was 76 percent, the same as the second quarter and up from 70 percent in 2008.

The entry-level price of $151,220 required a minimum income of $26,700 to cover a monthly PTI of $890.

Quick facts

  • C.A.R. First-time Buyer Housing Affordability Index stood at 64 percent in the third quarter of 2009 compared with 55 percent (revised) in the third quarter of 2008.

  • The median price of an entry-level home in California was $247,150 in the third quarter of 2009.

  • The estimated monthly payment including taxes and insurance was $1,450 in the third quarter of 2009.

  • The minimum household income needed to purchase an entry-level home in California in the third quarter of 2009 was $43,500.

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