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Erika Kauzlarich-Bird: Now’s the time for families to buy houses

Real Estate Talk

Posted: March 15, 2012 1:55 a.m.
Updated: March 15, 2012 1:55 a.m.
 

It’s certainly true here in the Santa Clarita Valley, so it’s not surprising to learn that more families — statewide and nationwide — than ever before can afford to buy a home because of today’s low interest rate on home loans and lower home prices.

While up 5 percent from the record low for this down cycle, we’d have to go back to 2003 to match February’s median single-family home price here in the SCV of $358,000. The $194,000 condominium median price, also up 5 percent from the low-water mark, was last seen locally in 2002.

Yet, when today’s low interest rates are factored into the homebuying equation, today’s dollars can buy much more home for the buck.

The nationwide pattern, recently confirmed by the National Association of Realtors, followed on the heels of recent reports from the California Association of Realtors that affordability throughout California rose to its highest level during the fourth quarter 2011.

The percentage of homebuyers who could afford to purchase a median-priced, existing single-family home in California rose to 55 percent in the fourth quarter of 2011, up from 52 percent in third-quarter 2011 and from 50 percent in the fourth quarter of 2010. The index was the highest since CAR began tracking this statistic in 1988, and equaled a high set in first-quarter 2009.

Homebuyers statewide needed a minimum annual income of $57,750 to qualify for the purchase of a $282,350 statewide median-priced, existing single-family home in the fourth quarter of 2011. The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,440, assuming a 20-percent down payment and an effective composite interest rate of 4.31 percent.

The nationwide housing affordability index — which tracks median home prices, median family incomes, and the average mortgage rate — reflected a similar reality, none of which is particularly surprising given what housing has been through.

What is worrisome is that too many families who otherwise would buy a home still seem oblivious to today’s unique opportunities.

The national index in January reached 206.1, the highest level since tracking began in 1970. It also was the first time the index broke the 200 mark, meaning the typical family had roughly double the income needed to purchase a median-priced home.

Even as housing’s ongoing troubles remain, particularly regarding owners who owe more than the current resale value of their home and tougher loan qualifying standards, it is not hyperbole to make this simple statement: For buyers who can qualify for a mortgage, now is a very good time to become a homeowner.

That’s particularly true here in the Santa Clarita Valley because, quite frankly, our lifestyle is desirable and our local economy is stronger than other Southern California outposts. All that means is that today’s opportunities won’t last too much longer.

Indeed, while local Realtors believe affordability will remain high for the remainder of the year, dwindling inventories in many markets, including locally, have declined to a point where there will be more upward pressure on prices.

If access to credit improves and the inventory expands, we could see a more meaningful increase in sales and broader stabilization in prices, especially in regions with stronger job growth, places just like the Santa Clarita Valley.

 If access to credit improves and the inventory expands, we could see a more meaningful increase in sales and broader stabilization in prices, especially in regions with stronger job growth, places just like the Santa Clarita Valley.

Erika Kauzlarich-Bird is President of the Santa Clarita Valley Division of the Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.

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