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REALTOR®: Entry-level Housing Affordability at 24 percent in California and 17 percent in San Mateo County

Monday, December 10, 2007

According to the California Association of REALTORS®, the percentage of households that could afford to buy an entry-level home in California stood at 24 percent in the third quarter of 2007, unchanged from the same period a year ago. The latest figures also show in places like San Mateo County, housing affordability has become even more out of reach. C.A.R. reported the First-time Buyer Housing Affordability Index for San Mateo County dropped to 17 percent in the third quarter of 2007 from 20 percent the same period a year ago.

C.A.R.’s First-time Buyer Housing Affordability Index measures the percentage of households that can afford to purchase an entry-level home in California. The Index is the most fundamental measure of housing well-being for first-time buyers in the state.

The minimum household income needed to purchase an entry-level home at $482,910 in California in the third quarter of 2007 was $99,590, based on an adjustable interest rate of 6.56 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 $3,320 for the third quarter of 2007.

In San Mateo County, the minimum household income needed to purchase an entry-level home at a first-time buyer median price of $816,000 was $168,280. The monthly payment including taxes and insurance was $5,609. It’s the reason why the San Mateo County Association of REALTORS® (SAMCAR) continues to work with C.A.R. to urge elected officials in Washington to act on increasing all federal loan limits for California, according to SAMCAR President Geoffrey Craighead.

Craighead explained since the Office of Federal Housing Enterprise Oversight recently announced conforming loan limits for 2008 will remain at 2007 levels, the conforming loan limit on a single family dwelling will be $417,000 - the same as it was last year, which makes the cost of owning a home in California out of reach for many families.

“The conforming loan limit is important in San Mateo County in that we have been lobbying to get the same treatment as Hawaii, Alaska and Guam. They are considered high priced areas, yet their conforming limits are 50 percent higher,” explained Craighead.

“If we are ever successful, a $625,500 conforming limit in San Mateo County would help with affordability,” said Craighead. “With 20 percent down you are now in the $780,000 territory with a PITI (principal, interest, taxes and insurance) of only $4,513. Although still not the median range of $816,000, it would be a sizable reduction from a PITI of $5,609.”

Craighead added, “Although the volume of sales in San Mateo County is off some 35 to 40 percent, appreciation continues at a 9 percent rate. Homes cost more than last year and since the conforming limits remain the same, the properties are now even more unaffordable.”

C.A.R. reported at 48 percent, the High Desert region was the most affordable in the state, followed by the Sacramento region at 46 percent. Santa Barbara was the least affordable region in the state at 11 percent, followed by the Monterey region at 16 percent.

The San Mateo County Association of REALTORS® (SAMCAR) is a professional trade organization representing over 3,800 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula. SAMCAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in San Mateo County.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Julie Ziemelis, Director of Public Affairs, e-mail , or phone (650) 696-8214.

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