Thursday, July 07, 2005

Minimum Salary of $122,690 Required

The California Association of Realtors
said in a report released today that only 16 percent of households in the state can afford to buy a median-priced home, and that the minimum income necessary to do that was almost $123,000.
"LOS ANGELES--(BUSINESS WIRE)--July 7, 2005--The percentage of households in California able to afford a median-priced home stood at 16 percent in May, a 3 percentage-point decrease compared with the same period a year ago when the Index was at 19 percent, according to a report released today by the California Association of REALTORS(R) (C.A.R.). The May Housing Affordability Index (HAI) declined 1 percentage point from April, when it stood at 17 percent.

C.A.R.'s monthly housing affordability index measures the percentage of households that can afford to purchase a median-priced home in California. C.A.R. also reports housing affordability indexes for regions and select counties within the state. The Index is the most fundamental measure of housing well-being in the state.

The minimum household income needed to purchase a median-priced home at $522,590 in California in May was $122,690, based on an average effective mortgage interest rate of 5.85 percent and assuming a 20 percent downpayment. The minimum household income needed to purchase a median-priced home was up from $108,020 in May 2004, when the median price of a home was $463,320 and the prevailing interest rate was 5.77 percent."

At this rate, it will be just two years before the Housing Affordability Index drops below 10 percent. That's one in only 10 people in the state who will be able to afford to buy a home.

Bubble? What bubble?