Affordability gap continues to widen

Californians continue to fall behind in the home affordability game because housing prices are still rising faster than their incomes. As a result, they found it increasingly difficult to afford the $488,000 median price for a single-family home in the first three months of this year.

Households with the statewide median income of $53,540 were $60,380 short of the $113,920 qualifying income needed for a loan to buy such a home, according to the California Assn. of Realtors. In the first quarter of 2004, the gap was $41,660 between the $52,320 median household income and the $93,980 qualifying income needed to buy the median-priced home of $407,710.

The gap was the largest in the San Francisco area and the smallest in the Central Valley. In Southern California, the difference was $59,320 between the median household income of $52,050 and the $111,370 qualifying income needed to buy a $477,660 median-priced home.

The group’s Homebuyer Income Gap Index calculation is based on a 20% down payment and a monthly payment for principal, interest, taxes and insurance of no more than 30% of a household’s income.

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Briefly

* The average rate on 30-year, fixed mortgages fell for a fifth consecutive week to 5.75% last week from 5.78% the prior week, according to Freddie Mac. Rates on 15-year, fixed mortgages also fell, to 5.31% from 5.33% last week. Rates on one-year adjustable mortgages, however, edged up to 4.22% from 4.21%.

* In the second half of 2004, adjustable-rate mortgages and interest-only products accounted for 63% of new home loans, according to the Mortgage Bankers Assn.’s single-family mortgage activity survey released Wednesday.

* Contracts to purchase previously owned U.S. homes fell in March as higher borrowing costs deterred buyers, the National Assn. of Realtors said Monday.

* U.S. construction spending jumped a surprising 0.5% to a record high in March as home building also hit record levels, the Commerce Department reported Monday.

* U.S. mortgage applications in the week ended April 29 rose for a second week as the lowest borrowing costs in two months spurred home buying and mortgage refinancing, according to the Mortgage Bankers Assn.

From Times wire reports