Nearly 70 Percent Can Afford Entry Level Homes in California

May 18, 2009 No Comments »

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The percentage of households that could afford an entry-level home in California rose to 69 percent in the first quarter of 2009, up from 46 percent a year ago, according to the California Association of Realtors.

The group said said the minimum household income needed to purchase a home valued at $213,040 in the pricey state was just $38,090, based on an adjustable-rate mortgage at 4.96 percent with a 10 percent down payment.

The group said first-time buyers typically buy a home equal to 85 percent of the prevailing median price, so the monthly mortgage payment including taxes and insurance would be around $1,270.

A year ago, households would have needed to come up with $65,030 to qualify for a mortgage on an entry-level home; the median household income in California is $61,030.

Housing affordability has surged recently because home prices have fallen sharply and interest rates are at record lows.

However, that doesn’t mean it’s necessarily the right time to buy, especially with home prices expected to drop another 36 percent in the state over the next 12 to 18 months.

The High Desert region had the greatest level of affordability at 83 percent, while San Luis Obispo County and Orange County were the lowest, at 49 percent and 56 percent, respectively.

In Los Angeles County, affordability rose to 57 percent from 36 percent a year ago, with an entry-level home going for $257,970, or a monthly mortgage payment of $1,540.

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