Special to the Town Crier
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, but affordability in Silicon Valley has become even more out of reach, according to a report from the California Association of Realtors.
C.A.R. reported the First-time Buyer Housing Affordability Index for Santa Clara County dropped to 21 percent in the third quarter of 2007, from 26 percent in the third quarter of 2006. The index measures the percentage of households that can afford to purchase an entry-level home in California.
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.
In Santa Clara County, the minimum household income needed to purchase an entry-level home at a first-time buyer median price of $724,630 was $149,437. The monthly payment, including taxes and insurance, was $4,981.
The Silicon Valley Association of Realtors continues to work with C.A.R. to urge elected officials in Washington to act on increasing all federal loan limits for California, according SILVAR President Mark Burns.
Burns said homes in California will always be higher priced than in other places, particularly in Silicon Valley, “because of great schools, superb commute location and a reasonable mix of shopping and services within a few blocks in every direction.”
For those hesitant to take the plunge, Burns said, “Be prudent, but get off the fence and buy. You buy a home because you want a place to call your own. A place close to work or good schools, or an easy commute to the airport. Everyone wants a home, but so many are spooked by the credit crunch headlines we see in the news these days.”
“Rates are declining,” he said. “That is good news. Just be careful, conservative and realize that what you like about Silicon Valley will be the reason why others will continue to come here. There’s a reason why California is the sixth-largest economy in the world.”
The Silicon Valley Association of Realtors provided information for this article. Send questions to Rose Meily at rmeily@silvar.org.
