Entry-level housing affordability reached 69 percent

LOS ANGELES, CA – May 15, 2009 – (RealEstateRama) — The percentage of households that could afford to buy an entry-level home in California stood at 69 percent in the first quarter of 2009, compared with 46 percent (revised) for the same period a year ago, according to a report released today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).

C.A.R.’s First Time Buyer Housing Affordability Index (FTB-HAI) measures the percentage of households that can afford to purchase an entry-level home in California. C.A.R. also reports first-time buyer indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being for first-time buyers in the state.

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 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent 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 percent 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.

The First-Time Buyer Housing Affordability Index also rose 7 percentage points in the first quarter of this year compared with the fourth quarter of 2008, due to a 14.1 percent decrease in the entry-level median home price.

At 83 percent, 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 percent, followed by the Orange County region at 56 percent.

Note: The effective interest rate series previously used to calculate C.A.R.’s First-Time Buyer Housing Affordability Index (FTB-HAI) was discontinued in 2008. Beginning with this news release, the FTB-HAI will incorporate an effective interest rate that is based on the one-year, adjustable-rate mortgage (ARM) from Freddie Mac’s Primary Mortgage Market Survey (PMMS). The effective rate accounts for both the one-year ARM rate and the points/fees as reported by Freddie Mac. The revised statewide historical series for the period 2000-Q1 through 2009-Q1 is posted on the C.A.R. Web site at www.car.org; the complete revised historical series for the counties and regions will be posted on car.org on May 21.

Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF
REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with nearly 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

C.A.R. First-Time Buyer Housing Affordability Index

* — percentage of California households that can afford to purchase a median-priced home

r – revised

Source:  CALIFORNIA ASSOCIATION OF REALTORS®

Source:  CALIFORNIA ASSOCIATION OF REALTORS®

Quick Facts:
· C.A.R. First-time Buyer Housing Affordability Index stood at 69 percent in the first quarter of 2009 compared with 46 percent (revised) in the first quarter of 2008
· The median price of an entry-level home in California was $213,040 in the first quarter of 2009
· The estimated monthly payment including taxes and insurance was $1,270 in the first quarter of 2009
· The minimum household income needed to purchase an entry-level home in California in the first quarter of 2009 was $38,090

C.A.R. reports entry-level housing affordability reached 69 percent in the first quarter of 2009