The California Association of Realtors reported (Aug. 19, 2008) that entry-level housing affordability increased 50 percent in second quarter 2008 as compared to the same time in 2007.

That's a good thing for new homeowners.  We as Realtors should know this and focus on what will eventually jump start the market.

The percentage of households that could afford to buy an entry-level home in California stood at 48 percent in the second quarter of 2008, as compared with 24 percent for the same period a year ago.

California Association of Realtors uses First Time Buyer Housing Affordability Index (FTB-HAI), which measured the percentage of households that can afford to purchase an entry-level home in California.

The minimum housing income needed to purchase an entry-level home at $329,120 in California in the second quarter of 2008 was $62,870, based on an adjustable interest rate of 5.69 percent and assuming a 10 percent down payment. 

First-time buyers typically purchase a home equal to 85 percent of the prevailing median price in California.  The monthly payment including taxes and insurance was $2,100 for the second quarter of 2008.

At $62,870, the minimum qualifying income was 38 percent lower than a year earlier when households needed $101,440 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.

The High Desert region of California was the most affordable area in the state. The San Francisco Bay Area region was the least affordable.

Posted by Harrison K. Long, Explore Properties Group, Irvine, CA

Source: California Association of Realtors