The percentage of first-time homebuyers able to purchase a home rose 11 percent during the first quarter to 44 percent as mortgage rates dipped 0.56 percent and the entry-level median home price fell 14.3 percent, the California Association of Realtors reported.
A year ago, the affordability rate stood at just 26 percent of California households, which clearly didn’t bode well for sales as tougher mortgage underwriting guidelines were introduced.
The group said the minimum household income necessary to purchase an entry-level home at a price of $356,350 was $67,830 during the quarter, assuming the borrower put down 10 percent and acquired an adjustable-rate mortgage at 5.65 percent.
During the first quarter of 2007, a first-time buyer in California needed household income of $96,500 to qualify for a mortgage on an entry-level home.
Unfortunately, the median household income in California was $50,700 during the quarter, so most families are still unable to afford a home, especially since mortgage rates will likely be higher than 5.65 percent as many opt for a fixed mortgage product.
Sacramento County and the High Desert posted the highest affordability rate in the state at 64 percent, while Monterey and the Bay Area were the least affordable, at 29 and 30 percent, respectively.
Affordability in Los Angeles County rose to 35 percent during the first quarter, up from 27 percent in the fourth quarter and 21 percent a year ago.
To give you an idea of how California stacks up, affordability stood at 69 percent for the nation as a whole during the first quarter, on minimum qualifying income of $31,760 for a median home price of $166,860.