The Real Deal
Creativity can turn dreamers into buyers
While the percentage of households in California that are able to afford a median-priced home decreased by 5 percent in February compared to a year ago, Santa Clara County's affordability rate has gone up by 8 percent.
Although still below the state average in affordability, Santa Clara County's affordability index rose from 19 in February of 2001 to 27 in February of 2002. In contrast, California's Housing Affordability Index stood at 31 percent, down five points from 36 percent in February 2001, according to the California Association of Realtors.
"Double-digit home price appreciation pushed the statewide median price to a record $289,550 in February, a 19.8 percent increase," said California Association of Realtors President Robert Bailey. "Following January's 17.1 percent year-to-year increase in the cost of a single-family home, housing is becoming increasingly unaffordable for many families in California."
Nationwide affordability is holding steady at 57 percent, while California shows an affordability gap of 26 points compared to the rest of the country. The California Association of Realtors' monthly housing affordability index measures the percentage of households that can afford to purchase a median-priced home in California. The association also reports housing affordability indexes for regions and select counties within the state. The index is one of the most fundamental measures of housing well-being in the state.
While more people may be able to buy a home in Santa Clara County, finding an affordable home to buy may be difficult, given the special nature of the Silicon Valley real estate market. For instance, the statewide median price of $289,550 is nowhere near the median prices of homes in the area, which range from $850,000 in Los Gatos to $1,097,000 in Saratoga.
What can people do to grab on to that American dream? Jimmy Kang of Wells Fargo Home Mortgage said there are many programs now that help dreamers become buyers.
"Rates are very low, making the housing affordability index higher than it has been for almost five years, especially with housing prices being lower. There are also some interest-only payment loan programs to make the payments the lowest without causing any negative amortization."
Kang's advice for first-time buyers with fixed incomes is to become creative.
"Think about possibly partnering with someone. For example, I have two brothers that were each looking for their own house. By partnering, they were able to double their purchase power and purchase a house for over $500,000, which is more realistic than something half the price," he said.
Addressing the issue of housing affordability has become a concern throughout the real estate industry. According to the position of the National Association of Realtors, necessary initiatives, programs and policies must be developed and supported by key policymakers to encourage homeownership opportunities for all Americans and increase the supply of housing nationwide.
Information provided in this column is presented by the Realtor members of the Silicon Valley Association of Realtors at www.siliconvalley-realtors.org. Send questions on any topic to jnewton@jnpr.com.
Saratoga, California Since 1955
