$125,870 Salary Buys Median-Priced Home

From the California Association of REALTORS®

The percentage of households in California able to afford a median-priced home stood at 16 percent in June, a 2 percentage-point decrease compared with the same period a year ago when the Index was at 18 percent, according to a report released today by the California Association of REALTORS® (C.A.R.). The June Housing Affordability Index (HAI) was unchanged from May, when it also stood at 16 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 $542,720 in California in June was $125,870, based on an average effective mortgage interest rate of 5.71 percent and assuming a 20 percent downpayment. The minimum household income needed to purchase a median-priced home was up from $111,420 in June 2004, when the median price of a home was $468,050 and the prevailing interest rate was 6.01 percent.

The minimum household income needed to purchase a median-priced home at $219,000 in the U.S. in June 2005 was $50,790.