JAM EASES A LITTLE FOR HOMEBUYER.

Byline: GREGORY J. WILCOX 

Staff Writer

Housing affordability for first-time buyers improved slightly in Los Angeles County and across the state in the 2007 first quarter, although prices remained high despite tumbling sales, a trade association said Thursday.

In the county, affordability slipped to 20 percent from 21 percent a year earlier, but improved from 19 percent in the 2006 fourth quarter, said the Los Angeles-based California Association of Realtors.

The association measures affordability by the percentage of households that can afford the median-price home in their area.

The affordability number is based on an adjustable interest rate of 6.3 percent and a 10 percent down payment. And first-time buyers typically purchase a home equal to 85 percent of the prevailing median price.

First-time buyers in the county needed to earn a minimum $101,090 annually to qualify for a home priced at $501,390, the median in the year's first three months, the association said. The monthly payment, including taxes and insurance, would be $3,370.

Leslie Appleton-Young, the association's vice president and chief economist, said potential buyers are still waiting for a big price slide but the odds of that happening are not good as long as the economy remains sound.

That's not the best news for someone waiting to buy that first house.

"You've still got a situation where first-time buyers are in a jam," Appleton-Young said. "And potential first-time buyers in Los Angeles County are up against a huge hurdle. The median here is about twice the nation's."

Statewide, 25 percent of households could afford an entry-level home in the first quarter, down one percentage point from a year earlier and unchanged from last year's fourth quarter.

The qualifying income was $96,910, the median price $480,670 and the monthly payment $3,230.

The high desert, which includes the Antelope Valley communities of Palmdale and Lancaster, remained the state's most affordable market.

Here affordability increased to 44 percent from 41 percent a year ago and in last year's fourth quarter.

A household in this market would have to earn $54,703 annually to qualify for a median-price home costing $271,430. The monthly payment would be $1,820.

Affordability increased in six of 19 major markets tracked by the association.

The report also showed that:

In Ventura County, affordability increased one percentage point annually to 26 percent in the first quarter and remained unchanged from last year's fourth quarter. The qualifying income level was $115,300, the median price $571,860 and the monthly payment $3,840.

In the Inland Empire, affordability increased to 36 percent in the first quarter from 35 percent a year earlier and from 34 percent in the prior quarter. The minimum qualifying income was $69,310, the median price $343,770 and the monthly payment $2,310.

Jonathan Weiss, senior investment associate at Marcus & Millichap Real Estate Investment Services, said renting is now less expensive than owning.

"The average monthly payment differential between owning and renting is about $3,000," he said of the state average.

Andrew LaPage, an analyst at La Jolla-based DataQuick Information Systems, said that affordability is increasing in areas that have seen an erosion in the median price.

This is expected to spread to other areas as the market slump continues.

"I'm certainly open to the possibility you may see increased affordability in lower cost neighborhoods in the next six to 12 months," he said.

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