LOS ANGELES (May 14) — The percentage 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 (see chart above), 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. 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% 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.
MP: From lows of 26% in both 2006:Q2 and 2007:Q2, the FTB-HAI has increased by 43 percent to 69% in the first quarter of 2009, the highest first-time buyer housing affordability in the history of the index. Stated differently, only about 1 in 4 California households could afford an entry-level home in 2007, and today almost 7 out of 10 households can afford an entry-level home.