Realtors group finds a silver lining

Frustrated California renters take heed: A trade group says it’s getting easier for people to afford their first home.

With home prices in a downward spiral in many once-booming areas, the percentage of California households that can afford to finance an entry-level home increased in the last three months of 2007 compared with the same period a year earlier, the California Assn. of Realtors said Tuesday.

The trade group for real estate agents calculates affordability based on the minimum household income required to make a 10% down payment and secure an adjustable interest rate loan at 6.21%.

Some 33% of the households in the state met those guidelines in the fourth quarter -- up from 25% in the same three months of 2006, the association said.

The typical statewide price for an entry-level home during the quarter was $411,170, the trade association said. To afford financing such a purchase, the association estimated buyers needed to earn $82,200.

The monthly payment for such a home, including taxes and insurance, was $2,740, the association said.

An entry-level home was defined as one priced at about 85% of the median home price in an area.

The most affordable area of the state during the quarter was the desert north of Los Angeles, where some 54% of households met the association’s $43,800 annual income threshold to finance an entry-level home priced at $218,880.

Sacramento County was next, with 53% of households within the income range needed to afford a home priced at $252,920.

The least affordable area was the Central Coast region of Monterey, where only 20% of households earned the $118,200 needed to finance an entry-level home at $591,200.

In Los Angeles County, 27% of households earned the $86,700 a year needed to buy a home priced at $433,200.

Some 46% of households in Riverside and San Bernardino counties, which have been hit particularly hard by rising foreclosures and falling home values, earned $57,600 a year, enough to finance a $287,330 home, the association said.

In the San Francisco Bay area, meanwhile, only 23% of households reported income of at least $132,300, the minimum to purchase a home priced at $660,660.

A separate report found that confidence among U.S. home builders rose for a second straight month, the first back-to-back increase in almost a year.

The National Assn. of Home Builders/Wells Fargo index of builder sentiment increased to 20, from 19 in January. The index in December reached 18, the lowest since it debuted in January 1985. Levels under 50 mean most respondents view conditions as poor.