Housing affordability among first-time home buyers improved slightly in the third quarter of 2010, both on a quarter-to-quarter and year-to-year basis, according to C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI). The percentage of first-time buyers who could afford to purchase an entry-level home in California stood at 66 percent in the third quarter of 2010. In the second quarter of 2010, the Index was a revised 65 percent and was 64 percent in the third quarter of 2009.
“With interest rates at historic lows, which have led to lower monthly mortgage payments, affordability continues to remain at near record-high levels in California,” said C.A.R. President Beth L. Peerce. “Another high point for first-time buyers is the current ratio between the California median price and the California median household income. During the third quarter, the ratio stood at 5 to 1 and was at a level we haven’t seen in the last 10 years. This is opening many doors for potential first-time buyers.”
First-time buyers, who tend to purchase homes equal to 85 percent of the prevailing median price, needed to earn a minimum annual income of $42,300 to qualify for an entry-level home of $266,620 during the third quarter of 2010. The monthly payment, including taxes and insurance, was $1,410, assuming a 10 percent down payment and an adjustable effective interest rate of 3.66.
El Dorado Realty Company 