How Figures Were Derived for First-Time Home Buyer Models

Here’s how The Times derived the two hypothetical couples used in this story:

The couple with $39,000 in annual income is based on information from D&B-Donnelly; Demographics, a marketing and research firm, which estimates that the average household income in Los Angeles County last year was $39,604. In the six-county area, the estimated average ranges from a low of $34,556 in San Bernardino to a high of $47,117 in Orange County.

The figure of $20,000 for a down payment was chosen because it reflects the approximate net worth of the top 20% of renters in California, according to studies of this state’s first-time buyers.

The couple with $30,000 in annual income is based on the results of several published studies that found that the typical first-time buyer earns about 75% of a given county’s average household income.

The $10,000 down payment available to this hypothetical couple is based on discussions with economists and realtors, most of whom said that $10,000 is the minimum amount of cash a buyer would need to close a deal in Southern California.

The typical first-time buyer of an existing home in California last year paid $139,900 for the property, according to the California Assn. of Realtors’ 1988 Housing Finance Survey. The typical buyer made a 10% down payment of about $14,000 and had a gross annual household income of $48,000.