A year earlier, the minimum income to buy starter home here was over $120,000 a year, and the minimum income was nearly $170,000 in the fall of 2005, just before the housing slump got rolling. The last time affordability here was this high was in the first quarter of 2003, CAR figures show.
CAR’s first-time homebuyer housing affordability index melds home costs, incomes and prevailing interest rates. And there’s an easy answer to “Why the change?” The estimated price of an Orange County starter home this summer was just under $440,000, CAR reports. The typical starter home cost $604,000 in the summer of 2005.
Falling prices have put starter homes within reach of a higher number of Orange County families. CAR estimated that 43% of the households in Orange County could afford starter homes here in the third quarter this year, vs. 23% in Q3 2007. (The median household income in Orange County was just under $73,300 in 2007.)
More than half of households statewide can afford the typical California starter home, CAR reported.
Fifty-three percent of households could afford a starter home in the state based on a typical entry-level price of $287,760, CAR reports. The typical entry-level price of a California condo was $260,070, CAR reported. Fifty-seven percent of households could afford that.
This could explain why I have seen so much activity in the $300,000 to $450,000 price range, even with the bad economic news.