Is it affordable to buy a home in Santa Clarita
Purchasing a home is one of the largest financials decisions a homebuyer will make in their lifetime. Deciding what, where, and if it’s a good time to buy a home can weigh heavy on purchaser’s mind. The question for many first time home buyers is: what is the average monthly payment, on a median priced home, and can I afford that?
California’s Housing Affordability Index is a ratio of people’s income versus the median home price and how many of those people could afford that median home price with their income and current lending guidelines.
According to California’s Housing Affordability Index the 3rd quarter of 2013, the ratio is 32%. Almost 1/3 of people in California can afford the median home price, which in the 3rd quarter was $433,940 and the average qualifying income was $89,170. Factoring the median home prices, average interest rates, and assumption on the needed income based on current guidelines. In 2012 the housing affordability peaked at a highest at 56%. That was a perfect storm after the bubble burst, prices crashed down and rates had hit all time lows as well. The affordability index back in 1988 was 31.9%!
First time home buyers affordability is based on entry level home prices. Not all home buyers are looking to purchase a home at the median home price. Many first time home buyers are looking for a starter home and plan either keeping the home for long term investment or with plans to sell once they gain equity to move up to the next home. Not to mention they are typically using FHA programs, or lower down payment programs to get in the door.
What should we expect for 2014? After seeing home prices increase in 2013, a lack of inventory in the local market place… pending sales suggest 2014 housing market will have growth. Housing affordability is expected to remain in the high 20% to low 30% throughout the last quarters in 2014. Rates, home prices, and unemployment rate in California are all expected to be positive for the year, which are good signs for and expanding real estate market.
We are expecting to see rates go up, which does mean now is the time to buy!
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