First Time Homebuyers Will Pay a Bit More

The housing market collapse has been great for part of the population in the US, which are the first time home buyers. Prices were low, mortgage rates were very low, and around 58% of families in the San Diego County area can afford to purchase an entry level home as stated by the California Association of Realtors. 

This figure is just a tad down from the high that was seen during the first quarter of 2009, which at that time was at 60%, but it is still a long way from the affordable lows seen during the housing bubble. As an example, the second quarter of 2006, the California Association of Realtors only reported 23% of San Diego families could afford an entry level home.

According to the U.S. Census Bureau in 2009, homeownership rate in San Diego was 56.4%.

The California Association of Realtors using specific ways to calculate the affordability for entry level homes. One way is that a first time home buyer will buy a home that is 85% of the median price found in an area, they will use an adjustable loan, and will have 10% to put down on the home. Adjustable rate loans are not as popular since the housing market began to falter. Leslie Appleton-Young of CAR’s chief economist stated that this group is still using adjustable rates, as it is the easiest way to measure home affordability rates over a period of time.

Throughout California, the California Association of Realtors predicts that 67% of all families could afford an entry level home that is $266.750. The monthly estimated payment, which includes insurance and taxes, would be $1,470, meaning a family needs to have an income of $43,960 annually.

Appleton-Young stated, “One of the most interesting things is that U.S. affordability is slightly below California,” and went on to say,” That’s a first.”

The minimum annual household income in San Diego County would be $62,260 in order to afford an entry level-home of $377,730 with  monthly payments of $2,080. When it comes to affordable entry level homes, San Diego County is in the middle to other California regions. San Luis Obispo County region is estimated to be the least affordable with just 48% of households being able to afford an entry-level home, next comes the San Francisco Bay area at 49%. The most affordable regions for first-time homebuyers include High Desert with an 84% and Sacramento County at 80% affordability rate.

Overall, San Diego affordability is low in comparison with 37% of families able to afford a home with the median price of $392,620 explained, Appleton-Young.

The California Building Industry Association released a study stating 44% of families in the San Diego metro area during the second quarter of 2010 could afford a home. New York City was the top for least affordability, next was the San Francisco Bay area, and San Luis Obsipo.

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