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, according to C.A.R.’s First-time Buyer Housing Affordability Index (FTB-HAI).  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.  In the second quarter of 2010, the Index was a revised 65 percent and was 64 percent in the third quarter of 2009.

first-time buyer“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.