Not many can afford California home

Shannen Doherty
why we like her?
She's not a bitch, she just plays one on TV. Excellent.
why is she famous?
She played Brenda Walsh on Beverly Hills 90210, and is the star of the WB witch show Charmed (but recently announced her departure). She also has one of the worst reputations for behavior in Hollywood.


Not many can afford California home
Survey: Only 14% of households can buy typical house with traditional down payment.
Soaring prices in California's housing market have shut out a record 86 percent of households from buying a typical home with a traditional down-payment, according to a study released Thursday.
Home prices across California have more than doubled since late 2001, increasing pressure on home buyers, who needed a minimum household income of $133,800 to buy a home at the August median price of $568,890, the California Association of Realtors said in its report.
That meant that only 14 percent of households could afford the typical home, down from 18 percent a year earlier, and the lowest level since records began in 1989, the report said.
The group's calculation was based on a mortgage interest rate of 5.87 percent and assumed a 20 percent down payment. The national minimum household income needed to buy a median-priced home at $220,000 last month was $51,740, the group said.
"It certainly is a concern when we reach a record low for affordability," said association economist Robert Kleinhenz.
August's affordability reading matched a record low 14 percent recorded in early 1989, shortly before a downturn in property prices that began in mid-1991.
"Households in California want to buy homes and can find loan products to do so, but they have to stretch," Kleinhenz added. "Large numbers of households are dedicating 40 percent and in some case 50 percent of their income to housing costs ... The norm nationally is 30 percent."
Fast-rising prices in California have forced home buyers to opt increasingly for interest-only and adjustable-rate mortgages over 30-year fixed-rate mortgages to lower their monthly mortgage payments, a trend concerning many analysts.
They argue that mortgage payments when the loans readjust will be too large for many borrowers if interest rates rise and hold at high levels -- driving more homeowners to sell under distress if they can not refinance loans.
"Our concern is that because it's been so easy to refinance, people assume it always will be," said Beth Haiken, a spokeswoman for PMI Mortgage Insurance Co., a unit of PMI Group Inc. "They may be able to refinance, but not on the loan terms they want."
Just under a third of mortgages initiated or refinanced in California this year have interest-only components, compared with 1.4 percent in 2000, according to LoanPerformance, a unit of data provider First American Corp.
Another way home buyers in California are coping with high home prices is by increasingly moving from pricey urban coastal areas to inland areas where homes are more affordable.
California's coastal Santa Barbara region, where just 6 percent of state households could afford a median-priced home, was the state's least affordable market in August, the real-estate trade group said.
California's most affordable area in August was the High Desert region north and east of Los Angeles, followed by the Sacramento region in the central part of the state.
Twenty-eight percent of households could afford to buy homes in the High Desert region and 19 percent could afford homes in and around Sacramento, the state capital.
Home-price appreciation next year will be stronger in inland areas than in coastal areas, Kleinhenz said, adding that the overall pace of home-price appreciation in California was expected to slow next year.
"For 2006, we're saying California's median home price will go up by 10 percent, compared with a projected increase of 16 percent for 2005," Kleinhenz said.