Instant Approval Credit Cards

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

The California Association of Realtors reports that you need an income of $101,000 to buy an entry level home in Los Angeles, which means 80% of local families can’t afford to buy a home. Now, we understand the real estate market doesn’t work this way, but the Realtors try to measure ‘affordability,’ and it is worth taking a quick look at their findings.

The CAR reports that ‘affordability’ for entry-level buyers across California is 25%, but is just 20% in Los Angeles. down from 21% in LA a year ago. The national ‘affordability’ index is 64, up from 63 a year ago.

Here are the assumptions behind the 20% number: The Realtors calculate that the median-priced entry level home costs $501,000 in LA; the Realtors assume a buyer puts 10% down (Realistic? Probaly not), and can spend only 40% of his or her income on monthly housing expenses, which include mortgage, taxes and insurance. They assume an ARM at 6.3%, and crunch those numbers and come up with a minimum annual income of $101,000, which means only 20% of the population qualifies.

Why this exercise is somewhat irrelevant in the real world: LA homeowners borrow much more aggressively than this model allows.

Thoughts? Comments? Email story tips to lalandblog@yahoo.com.