Roughly half of Santa Clara buyers can afford new home

A new report indicates that many buyers in Santa Clara, California can afford the price of moving into a new home in the area.

Just over half - 51 percent - of Santa Clara households could afford to purchase an entry-level home in Santa Clara in the second quarter, reported the California Association of Realtors. In order to purchase such a home at the median price of $585,500, a Santa Clara homebuyer would need a minimum household income of at least $88,250. That figure is based on a 4.09 percent interest rate and assumes that the buyer would contribute a 10 percent down payment.

The report painted an encouraging picture for relocating families in the area. In 2007, only about 25 percent of the area's households could afford an entry-level home. But rising home prices have been able to correct some of the market's instabilities, said Karl Lee, president of the Santa Clara County Association of Realtors. "With the incredibly low interest rates, it's a good opportunity to buy, because a one-percentage drop in interest rates is equal to a 10-percent home price reduction when it comes to the buyer's monthly mortgage payments."

Rates fell even further this week, which could encourage some to consider moving now. According to the Mortgage Bankers Association, the average rate on a 30-year fixed-rate mortgage is just 4.43 percent.


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