Despite Market Slowdown, Housing Affordability Drops in California

Considering the fact that home sales in Califorinia are sinking, sellers do not appear ready to lower asking prices.

What else would explain the fact that the percentage of first-time buyers in the state able to afford a median-priced home stood at 24 percent in the third quarter of 2006 - compared with 28 percent for the same period a year ago, according to a report released Monday by the California Association of Realtors.

Affordability in Sacramento County remained at 38 percent, the same as the second quarter, but slightly lower than the 40 percent rate in third-quarter 2005. An individual thinking about a California mortgage in the area would need to earn at least $65,910 a year in order to qualify for the region’s median-home price of $319,060.

This is based on an adjustable rate of 6.58 percent and assuming a 10 percent down payment. The monthly mortgage payment would be $2,200.

In San Francisco County, affordability stood at 17 percent in the third quarter, up from 16 percent in the second quarter and down from 21 percent in last year’s third quarter.

San Mateo County affordability stood at 20 percent in the third quarter, 19 percent in the second quarter and 24 percent a year ago. Marin County affordability stood at 22 percent in the third quarter, up from 21 percent in the second quarter and 23 percent a year ago. You don’t need a mortgage calculator to realize these figures make ownership difficult for most.

Statewide, the minimum household income first-time buyers needed to buy a home at $478,710 in California in the third quarter of 2006 was $98,890, based on an adjustable mortgage rate of 6.58 percent and assuming a 10 percent down payment.

At 39 percent, the High Desert region was the most affordable region in the state, followed by the Sacramento region at 38 percent. Santa Barbara was the least affordable region in the state at 14 percent, followed by Monterey at 17 percent.