The latest numbers from the California Association of Realtors suggest homes in the Golden State have been getting a little more affordable. The percentage of households that could buy an entry-level home in California ($411,000) stood at 33% in the fourth quarter of 2007, compared with 25% for the same period a year ago.
Home prices may be falling, but buying one is still a stretch for most of the state’s residents. The Realtors figure you need a minimum household income $82,000 to purchase an entry-level home. That’s based on an adjustable interest rate of 6.2% and assuming a 10% down payment and a monthly payment including taxes and insurance of $2,740.
A recent report from the non-profit California Budget Project shows just how far behind the state is from the rest of the country. The state’s homeownership rate is relatively low, with 58% of residents owning their homes in 2006, compared to more than two-thirds (67%) of households in the nation as a whole. In Los Angeles, the city was forced to dial back on a multi-billion-dollar school construction effort because fewer people are moving to the high-cost city.
A coalition of 91 community groups in the state sent a letter to Bank of America yesterday urging the company to halt foreclosures by soon-to-be acquired Countrywide Financial. The groups urged the big bank to keep the mortgage company’s headquarters in California and modify adjustable loans into fixed ones with rates of no more than 6% for thirty years. They say it never hurts to ask.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.