Higher home prices offset lower interest rates to reduce housing affordability in California during the fourth quarter of 2012, the California Association of Realtors reported Monday.
The percentage of home buyers who could afford a median-priced existing single-family home in California decreased to 48 percent at the end of 2012, down from 55 percent in the last quarter of 2011, according to CAR's Traditional Housing Affordability Index.
The Index is considered the most fundamental measure of housing well-being for home buyers in the state.
Home buyers needed to earn at least $66,940 a year to qualify for the purchase of a $353,190 statewide median-priced single-family home in the fourth quarter of 2012, CAR said.
The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan would be $1,670, assuming a 20 percent down payment and an effective composite interest rate of 3.49 percent, according to CAR. The effective composite interest rate in the third-quarter of 2012 was 3.72 percent vs. 4.3 percent in the fourth quarter of 2011. --City News Service
Also, I large percentage of these foreclosed homes need more than just a facelift. Many of them are in need of major repairs or updating of expensive equipment - added expenses that buyers are not factoring into their financial planning.
According to CoreLogic, the shadow inventory continues to fall. They note there's only a seven month supply of homes. [1] And according to this fellow's chart, housing prices are in-line with where they should have been had we not had that disastrous bubble a few years ago. [2] 1. http://www.corelogic.com/about-us/news/corelogic-reports-shadow-inventory-continues-decline-in-october-2012.aspx 2. http://www.jparsons.net/housingbubble/