C.A.R. reports entry-level housing affordability more than doublesin third quarter
LOS ANGELES (Nov. 20) The percentage of households that could afford to buy an entry-level home in California stood at 53 percent in the third quarter of 2008, compared with 24 percent for the same period a year ago, according to a report released today by the CALIFORNIA ASSOCIATION OF REALTORS®.
C.A.R.’s First Time Buyer Housing Affordability Index (FTB-HAI) measured 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 $287,760 in California in the third quarter of 2008 was $56,100, based on an adjustable interest rate of 5.91 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 $1,870 for the third quarter of 2008.
At $56,100, the minimum qualifying income was 44 percent lower than a year earlier when households needed $100,500 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 income levels of the typical California households, where the median household income is $59,160.
The First-Time Buyer Housing Affordability Index also rose 5 percentage points in the third quarter of this year compared to the second quarter of 2008, due to an 11.9 percent decrease in the entry-level median home price.
At 73 percent, the High Desert region was the most affordable area in the state. The San Francisco Bay Area region was the least affordable in the state at 35 percent, followed by the San Luis Obispo County region at 38 percent.
Whether you’re ready to settle into your first home or looking to buy your fifth; are moving cross-country or cross-town, it’s smart to identify which attributes of a new home are most important to you. Be sure to sit down with your real estate agent and discuss your needs and wants for your new house. Here are five topics to think about when buying a home:
1) What You Can’t Live Without
Our lifestyle choices are often reflected in the homes we buy. Are you a motorcycle fanatic? If so, a roomy garage would be important to you. Have a big family? You’ll likely need to buy a home with at least four bedrooms. Perhaps you or your spouse is a gourmet cook. In that case, a well-designed kitchen could be a must for you. Before your real estate agent begins a home buying search for you, he or she will want to know which home attributes you can’t live without.
2) Schools and Family Needs
The quality of school systems has long been of importance to home-buying families. If you have children or are thinking about having children in your new home, you’ll want to discuss school information and statistics with your real estate agent. Not only is it important to consider the location of your home relative to area schools, but you’ll also want to think about the quality and diversity of local school offerings. Your real estate agent can provide statistics and information about both public and private schools in all the neighborhoods in which you’re considering buying a home.
3) Commuting
For many people, commuting from home to work and back is a necessary evil. A long commute can detract from a home-buyer’s quality of life and the time he or she gets to spend at home. Commuting should be a critical factor in home selection, because in many communities, traffic backups are increasingly common. And today, this phenomenon applies to urban, suburban and even rural areas. If having little or no commute to work is important to you, convey this to your real estate agent.
4) Community Details
Whether you hope to live in a vibrant urban neighborhood, or a charming rural town, the demographics, details and community statistics of a particular area are almost as important a consideration when buying a home as the details of the house itself. Do you want to live in the thick of the action? Prefer to get away from it all? If a particular aspect of a community is important to you—like a defined downtown area, or a strong recreation component—be sure to tell your real estate agent so that he or she can gather community information and keep this consideration at the forefront of your home search.
5) Budget
Of course, the most rigid constraint of a home-buying search is typically the buyer’s budget. Defining budget parameters quickly and early focuses a home search to a particular segment of the market. However, with the creative lending solutions available today, budget constraints are not as rigid as they once were or as many home-buyers assume them to be. Many innovative mortgage options are now available to both first-time and veteran home-buyers. Before beginning a home search, you should talk to both your real estate agent and your lender about your finance options and ultimately, your budget.
