Buying a Home is Now More affordable

Although at first glance it seems like a boring economic statistic - the affordability index of homes is actually a crucial indicator of where the market is heading. As we work through the oversupply of homes and look toward a recovery the fact that homes are an astonishing 18% more affordable is actually an important peg in the ladder back to recovery. Attached here is the full article which also shows an increase in the total numbers of homes sold.

-----------------Affordability Increases-------------------------
Entry-level housing affordability rises 18 percentage points in first quarter - California Homebuyers are Responding to Lower Prices

LOS ANGELES (May 20)—The percentage of households that could afford to buy an entry-level home in California stood at 44 percent in the first quarter of 2008, compared with 26 percent for the same period a year ago, according to a report released today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).



C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI) measures the percent?age 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 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 $356,350 in California in the first quarter of 2008 was $67,830 assuming a 10 percent down pay?ment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price.



At $67,830, the minimum qualifying income was 30 percent lower than a year earlier when households needed $96,500 to qualify for a loan on an entry-level home. Recent decreases in home prices and mortgage rates have brought affordability into better alignment with income levels of the typical California household, where the median household income was $50,700.



At 64 percent, Sacramento County and the High Desert region were the most affordable areas in the state. Monterey was the least affordable area in the state at 29 percent, fol?lowed by the San Francisco Bay Area at 30 percent.



DataQuick reports Southern California home sales surged last month to the highest level since August as bargain shoppers took advantage of price slashing. Although some higher-end costal markets also posted gains, the swell in transactions mainly reflects more sales of homes under $500,000 in inland areas where depreciation and foreclo?sures have been greatest, a real estate information service reported.



A total of 15,615 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties in April. That was up 21.9 percent from 12,808 the previous month but down 19 percent from 19,269 in April last year.





Sources: DataQuick and California Association of Realtors