Industry News

Fewer Californians able to afford real estate

Annual income needed to buy home climbs above $111,000

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The percentage of households in California able to afford a median-priced home fell to 18 percent in August, a 5 percentage-point decrease compared with the same period a year ago, according to a report released today by the California Association of Realtors. The August housing affordability index declined 1 percentage point compared to July, when it stood at 19 percent. The minimum household income needed to purchase a median-priced home at $474,370 in California in August was $111,180, based on an average effective mortgage interest rate of 5.83 percent and assuming a 20 percent down payment. This figure was up from $93,790 in August 2003, when the median price of a home was $406,140 and the prevailing interest rate was 5.66 percent. Nationally, the minimum household income needed to purchase a median-priced home at $190,100 in August 2004 was $44,550. At 42 percent, the High Desert region was the most affordable region in the state, followed by the Sacramento and Central Valley r...