A new report released by an industry trade group found that only 24 percent of California households could afford to buy an entry-level home during the second quarter.
Although the percentage is up slightly from 23 percent for the same period a year ago, the California Association of Realtors’ First-time Buyer Housing Affordability Index found that homes today are more expensive and require buyers to have higher minimum incomes than they did a year ago.
The minimum household income needed to purchase an entry-level home at $504,080 in California in the second quarter of 2007 was $101,550, based on an adjustable interest rate of 6.29 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 $3,380 for the second quarter of 2007.
This is compared to the $98,720 minimum annual income needed to buy an entry-level home in the second quarter of 2006 at $482,000, based on an adjustable interest rate of 6.48 percent. The total monthly payment a year ago was $3,290.
Residents of Southern California’s High Desert region had the most buying power in the second quarter, with 45 percent of households able to afford an entry-level home at $265,570, the total monthly payments of which were $1,780.
In the coastal regions of Santa Barbara and Monterey, the least affordable regions in the state, just 12 percent and 17 percent of households, respectively, could afford to buy a starter home in the second quarter.
The minimum household income required to purchase the entry-level Santa Barbara-area home at $707,170 was $142,460, while those in the Monterey region needed to earn $129,480 to buy a $642,740 home. The total monthly payment in Santa Barbara would be $4,750, and in Monterey, $4,320.