Wednesday, February 20, 2008
More in Inland Empire can afford first home
The Desert SunNew figures show 38 percent of households in the Coachella Valley can afford an entry-level home here.That indicates more people could afford homes in the fourth quarter of 2007 than at the end of 2006 - when affordability registered at 33 percent. 
The analysis, released Tuesday, also shows the desert area is more affordable than California overall, where the housing affordability index is up to 33 percent.
The First Time Buyer Housing Affordability Index analysis is considered the "fundamental measure of housing well-being for first-time buyers in the state," according to the California Association of Realtors.
In the Coachella Valley, a person would have to make a minimum of $57,300 to qualify for a $285,970 entry-level home.
Assuming the buyer puts 10 percent down and has an adjustable interest rate of 6.21 percent, officials say that translates into $1,910 monthly payments, including taxes and insurance.
That's mathematically speaking. Real life doesn't always add up that way.
"Everybody has their own story to tell and everybody who makes $57,300 a year doesn't necessarily fit into that program," said Kurt Handshuh of California Home Loan in Palm Desert.
"If they have a car payment, or child-support issues, or a credit card payment every month, that drives the price of a house (one can afford) down."
The affordability index measures how many people in a geographic area can afford an entry-level home - or 85 percent of the median - in that same area.
At the height of the market, affordability in the desert was 11 percent to 13 percent.
Affordability calculations are based on income, not wealth. That's why the "Palm Springs/ lower desert" region has sometimes had affordability rates that were lower than the state as a whole despite lower prices here.
The Coachella Valley relies on the tourism and hospitality industry, and resort jobs don't always pay enough for employees to afford a house, says Greg Berkemer, executive vice president of the California Desert Association of Realtors.
"You're finding the jobs in the desert won't allow you to buy in the desert," Berkemer said.
Homes are available in that range: nearly 24 percent of properties on the Desert Area Multiple Listing Service on Tuesday fell below the $285,970 price tag.
Entry-level homes in the Coachella Valley are generally considered anything priced under $500,000. Average prices in that market dipped almost 4 percent in 2007 and sales of those homes were down 24 percent from 2006.
They still made up 68 percent of the desert's sales in 2007.
Experts agree that home prices will need to fall more if the large inventory is going to get sold.
Factors other than price also go into home-buying decisions.
First-time homebuyer deals can help people afford a home, but those incentives aren't always available anymore.
The city of Coachella in September ran out of funds for its first-time homebuyer program. Officials are reworking the program and hope to have it up again in March.
That program funded more than 200 loans in four years. "We know there's a need out here," said Joann Lopez, the city's community services coordinator.
Adding to the complexities are all the problems on the lending side, including the end of exotic mortgages that got many people who might not have otherwise qualified into homes just a few years ago. "Not everyone at $57,300 can make that work," Handshuh said of affording an entry-level home.
"Not everyone is going to qualify."Labels: Corona, Foreclosure, Home Prices, Inland Empire, Loan Modification, Moreno Valley, Murrieta, Real Estate, Riverside, Short Sales, Statistics, Temecula
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