San Jose Housing Market: Affordable Housing Problems for First-Time Home Buyers

Looking for a California mortgage? You may wish to steer clear of Santa Clara County.

The percentage of households who could afford to buy an entry-level home in that region at 30 percent for the fourth quarter of 2006, down from 32 percent for the same period a year ago, according to a report released yesterday.

The California Association of Realtors said that the minimum household income needed to purchase an entry-level home in the county was $130,930 and the median first-time home buyer price was $646,000.

In San Mateo, 21 percent of households could afford to buy an entry-level home, compared with 23 percent a year ago. The minimum household income needed was $147,470 and the median first-time buyer price was $727,600. This reflects an ongoing affordability issue in the San Jose housing market.

Throughout the state, 25 percent of households could afford to buy an entry-level home, compared with 27 percent a year ago. The minimum household income needed to purchase an entry-level home at $477,400 in California in the fourth quarter of 2006 was $96,760, based on adjustable mortgage interest rates of 6.36 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 $3,230 for the fourth quarter of 2006.