Entry-Level Homeownership In California Becomes More Affordable

rcentage of households that could afford to buy an entry-level home in California stood at 69% in the first quarter of 2009, compared with 46% for the same period a year ago, according the California Association of Realtors' (CAR) First Time Buyer Housing Affordability Index. The minimum household income needed to purchase an entry-level home at $213,040 in California in the first quarter of 2009 was $38,090, based on an adjustable interest rate of 4.96% and assuming a 10% down payment. First-time buyers typically purchase a home equal to 85% of the prevailing median price. The monthly payment including taxes and insurance was $1,270 for the first quarter of 2009. At $38,090, the minimum qualifying income was 41% lower than a year earlier, when households needed $65,030 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 the income level of a typical California household, where the median household income is $61,030, CAR says. The First-Time Buyer Housing Affordability Index also rose seven percentage points in the first quarter of this year compared with the fourth quarter of 2008, due to a 14.1% decrease in the entry-level median home price. At 83%, 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 49%, followed by the Orange County region at 56%. SOUR


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