Industry News

Real estate affordability sours Californians

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Despite a drop in the percentage of California households in September able to afford a median-priced home compared to a year ago, affordability conditions made a slight improvement from the month before, according to a report released today by the California Association of Realtors. The Housing Affordability Index, which measures the percentage of households that meet the minimum affordability requirements to purchase a median-priced home, dropped from 19 percent in September 2004 to 15 percent in September 2005, but gained 1 percentage point from August when it stood at 14 percent, the association reported. The minimum household income needed to purchase a median-priced home at $543,980 in California in September was $128,270, based on an average effective mortgage interest rate of 5.9 percent and assuming a 20 percent down payment. This minimum income figure was up from $107,440 in September 2004, when the median price of a home was $463,630 and the prevailing interest rate was 5....