First-time buyer housing affordability improves slightly in Q3

Here is an article I read today from C.A.R. The median home price drop in Q3 has provided first time buyers with a great opportunity. according to "C.A.R.'s first-time buyer housing affordability index," the LA county saw a 5% increases in affordability over the past year. Here is the article:

For release:
Monday, Nov. 15, 2010

C.A.R. reports first-time buyer housing affordability improves slightly in third quarter

LOS ANGELES (Nov. 15) -- 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, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today. 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, according to C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI). In the second quarter of 2010, the Index was a revised 65 percent and was 64 percent in the third quarter of 2009.

C.A.R.’s FTB-HAI measures 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 considered the most-fundamental measure of housing well-being for first-time buyers in the state.

“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.

“Nearly every region in the state experienced an increase in first-time buyer housing affordability,” added C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Much of the increase in affordability can be attributed to the slight decrease in the state’s median home price during the third quarter.”

At 85 percent, the High Desert region was the most affordable area in the state. The San Francisco Bay region was the least affordable in the state at 51 percent, followed by the Santa Barbara area and the Santa Clara County regions, both at 53 percent.

Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 155,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

C.A.R. First-time Buyer Housing Affordability Index

C.A.R. Region	Q3 2010	Q2 2010		Q3 2009
California	66	65	r	64
California - Condos	73	70		68	r
United States	79	78		76
High Desert	85	84		85
Los Angeles County	57	56		52
Monterey Region	64	62		66
Northern California	70	68		63
Northern Wine Country	62	61		58
Orange County	56	54		51
Palm Sprgs/Lwr Desert	75	72		74
Riverside/SBernardino	78	77		78
Sacramento County	82	80		78
San Diego County	60	58		56
San Francisco Bay	51	49		49
San Luis Obispo County	54	48		47
Santa Barbara Area	53	50		52	r
Santa Clara County	53	51		53
Southern California	65	63		64	r
Ventura County	63	61		56
County
Alameda	53	51		52
Contra Costa	44	43		42
Fresno	79	77		76
Marin	42	38		37
Merced	84	83		83
Riverside	77	75		78
San Bernardino	81	81		81
San Francisco	41	36		35
San Mateo	42	41		40
Santa Cruz	49	46		43
Sonoma	64	62		60

* -- percentage of California households that can afford to purchase an entry-level home
r – revised

Source: CALIFORNIA ASSOCIATION OF REALTORS®

C.A.R. Region	Housing Affordability Index	Entry-Level Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
California	66	$266,620	$1,410	$42,300
California - Condos	73	$218,310	$1,150	$34,500
United States	79	$151,220	$800	$24,000
High Desert	85	$108,230	$570	$17,100
Los Angeles County	57	$297,500	$1,570	$47,100
Monterey Region	64	$295,040	$1,560	$46,800
Northern California	70	$210,050	$1,110	$33,300
Northern Wine Country	62	$312,450	$1,650	$49,500
Orange County	56	$432,170	$2,280	$68,400
Palm Sprgs/Lwr Desert	75	$152,920	$810	$24,300
Riverside/SBernardino	78	$161,590	$850	$25,500
Sacramento County	82	$157,280	$830	$24,900
San Diego County	60	$329,470	$1,740	$52,200
San Francisco Bay	51	$500,600	$2,640	$79,200
San Luis Obispo County	54	$311,010	$1,640	$49,200
Santa Barbara Area	53	$373,060	$1,970	$59,100
Santa Clara County	53	$534,400	$2,820	$84,600
Southern California	65	$271,420	$1,430	$42,900
Ventura County	63	$377,090	$1,990	$59,700
County
Alameda	53	$428,330	$2,260	$67,750
Contra Costa	44	$576,610	$3,040	$91,200
Fresno	79	$129,020	$680	$20,410
Marin	42	$685,360	$3,610	$108,400
Merced	84	$100,580	$530	$15,910
Riverside	77	$167,260	$880	$26,450
San Bernardino	81	$143,730	$760	$22,730
San Francisco	41	$573,500	$3,020	$90,710
San Mateo	42	$650,250	$3,430	$102,850
Santa Cruz	49	$442,530	$2,330	$69,990
Sonoma	64	$317,090	$1,670	$50,150