According to the California Association of Realtors (CAR), twice as many people can afford an entry-level home in the state of California.  They claim that 48 percent of the state’s households can now afford an entry-level home, defined as a price that is 85 percent of a median home.  The reasons why the public should take all of this with a grain of salt is that 1) the information comes from realtors, 2) apparently realtors are not very good at math, and 3) the information comes from realtors.

Realtors claim that the minimum income required to buy a Bay Area entry-level home, estimated at $582,130, is only $111,210.  How the hell is that even possible? Let’s try and breakdown the math to see if this is on the up and up.  Let’s assume that this fictional household is a family of four, with two working adults, and pays cumulative federal and state income taxes of about 30 percent (but can be as high as 35 percent).  Which means that the family takes home $77,847 in any best case scenario, or $6,487 per month.

Now, let’s say that the family puts 10 percent down on that entry-level home, which means that they would finance $523,917.  Now, let’s say they get a really good 30-year fixed rate for their jumbo loan of 7.25 percent.  It’s likely even higher this week but let’s assume 7.25 percent just for fun.  That’s a monthly payment of $3,574!  This is more than half of the family’s income and they still haven’t eaten, clothed themselves, saved any money, or god forbid, paid for car maintenance or *gas* to get to their freakin’ jobs! And we know they have to drive into the city to work, because they paid $582,130 for their home and that won’t even buy a couple of parking spaces downtown right now!  They are driving at least 30 miles one-way based on the price of their home.

Now go ahead, try and run this fictional household with the remaining $2,913 per month.  That is all of the money you have for food, utilities, property taxes, insurance, home maintenance, clothing, child care, car maintenance, gas, and other miscellaneous expenses.  Keep in mind that this household likely lives in the boonies with two cars!  I guarantee you will run out of money and realize that the figures that the realtors are dreaming up are fantasy, pure and simple.

So, while it may be true that more people can afford homes in our state now over a year ago, I seriously doubt that 48 percent of the state is willing or even able to really do so outside of the imagination of the average realtor.  I guess at this point realtors are willing to say almost anything to sell you a house.  Oh wait, they *always* do that.  Nevermind.

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