Housing Affordability Spikes Upward
INDUSTRY NEWS, SHASTA COUNTY, TIPS FOR BUYERS, TIPS FOR SELLERS
March 5th, 2009
The California Association of Realtors recently released a report detailing housing affordability for first-time buyers. The index measures the percentage of households that can afford to purchase an entry-level home in various geographic areas.
The overall index for California is 59%. During the recent real estate bubble, the index bottomed out closer to 20%. C.A.R claims “the index is the most fundamental measure of housing well-being for first-time buyers in the state.” My only beef with this index is the loan type selected for the calculation of the index. The formula uses an adjustable rate loan with a 10% downpayment. Why not a 30-year fixed rate loan? The downpayment is reasonable but let’s not promote or even suggest a buyer use an adjustable rate mortgage for their first home purchase. Haven’t we learned our lesson?
The drop in prices has lowered the qualifying income to purchase an entry-level home by 42%. Last year at this time, a buyer needed $83,700 in income to qualify. Today, with lower home prices and interest rates, buyers only need $59,160. On average, buyers purchase a home priced equal to 85% of the prevailing median price.
The affordability index varies widely across our great state of California. The most affordable places to be a first-time buyer include Riverside at 79% and the High Desert at 76%. Other selected areas have affordability indexes and entry-level prices as follows:
- Marin 29% $709,420
- San Francisco 30% $570,660
- Contra Costa 35% $540,050
- Monterey 58% $265,700
- Sacramento 74% $159,750
- Los Angeles 46% $301,110
- Northern California 56% $241,410
Redding is not broken out as a separate area. I’m working to get our data to the state association economist so future press releases detail our local area stats. FYI- United States entry-level price is $153,090 and indexed at 76%.
Just for yucks, Marin county entry-level buyers can expect a monthly mortgage payment of $4,650 and High Desert buyers can expect payments of $820. Marin must be 6x better place to live. I hope your income is six times higher-you’ll need it!
530-224-6767 or 530-941-7492
BRAD GARBUTT
REALTOR/BROKER ASSOCIATE
REAL ESTATE PROFESSIONALS GMAC
QUARTER CENTURY LOCAL REAL ESTATE EXPERIENCE
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