Home Affordability Still a Problem in California Despite Slowing Housing Market

Published Nov 28, 2006 | RSS Feed

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Even with home sales slowing throughout the state, home affordability remains an issue for California residents. First time homebuyers are feeling the most pressure.

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The housing market in California can easily be described as sluggish. Home sales are down and so are home prices. Inventory is building faster than ever.

Though the slowdown has been significant in many areas, home affordability is still a problem for most California residents. According to a report released Monday by the California Association of Realtors, only 24 percent of first-time homebuyers in California are able to afford a median-priced home. This number is down by 4 percent when compared to the percentage of people who were able to afford a home in this same period one year ago.

The minimum household income for those interested in purchasing a home in California at the median price of $478,710 is $98,890. This figure applies when the buyer has good credit, an adjustable rate mortgage, and 10 percent down. Anything less, and the buyer will need a higher income to make the mortgage payment, which will average somewhere around $3,000 per month.

Buyers looking for better home affordability may want to look toward the High Desert region, which is currently the most affordable region in California. Approximately 39 percent of homebuyers are able to afford a home in this market.

Markets for low income buyers to steer clear of include Santa Barbara, which is currently taking the title as the least affordable market considering only 14 percent of buyers able to afford a median priced home in this area.

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