Vallejo Area homes becoming more affordable

Area homes becoming more affordable
By RACHEL RASKIN-ZRIHEN/Times-Herald staff writer
Article Launched: 02/23/2008 07:51:38 AM PST

More people should be able to afford a Vallejo-area home now that prices have dropped, though stricter mortgage loan requirements make it difficult, local real estate experts said Wednesday.

The California Association of Realtors released its latest affordability index Tuesday, reporting that 33 percent of households could afford to buy an entry-level home statewide in the fourth quarter of 2007. That compares to 25 percent for the same period a year ago.

The San Francisco Bay Area has been among the least affordable housing markets nationally, reaching a 14 percent affordability rating at the height of the real estate boom.

In fact, in a California Building Industry Association report released in January 2005, the Vallejo area was the country's 20th most-expensive Metropolitan Statistical Area. The median price for existing homes in the area then was $399,000.

The median listing price for a home in Vallejo as of two weeks ago was $369,000, said Solano Association of Realtors president Lori Collins. The median home price in Benicia is $599,000 and it's $509,000 in American Canyon, she said.

Solano County's affordability rating in February, 2005, was 13 percent, and one would have needed $100,000 annual income to
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qualify, according to reports at the time.

Though the latest figures for Solano County and local cities were not immediately available Wednesday, the state report notes that statewide, a minimum household income of more than $82,000 was needed to buy a $411,170 entry-level home in the fourth quarter of 2007. This is based on an adjustable interest rate of 6.21 percent and assuming a 10 percent down payment. That would mean a monthly payment including taxes and insurance of $2,740, according to the report.

"Prices are significantly lower than they were last year, so they're more affordable to more people," Collins said. "But credit is still a huge issue. You must have much better credit and a larger down payment to qualify for a loan now."

Local Realtor Jeff Dennis echoed Collins' view.

"They calculate affordability based on home prices, interest rates and average income," he said. "Since interest rates are still relatively low and I think average income has remained steady, the lower home prices and increased availability should make buying a home here more affordable."

E-mail Rachel Raskin-Zrihen at RachelZ@thnewsnet.com or call 553-6824.