Lower home prices, coupled with low interest rates are making this an ideal time for many to purchase a home.  According to the Standard & Poor’s/Case-Shiller Index, home prices in 20 metropolitan areas were down 18.2 percent in November compared with the same month a year ago.  Phoenix, with a 33 percent drop, posted the steepest decline, followed by Las Vegas at 32 percent.

MAKING SENSE OF THE STORY FOR CONSUMERS

• With homes in the 20-city index losing nearly a quarter of their value since their peak in July 2006, more renters can now afford to buy a home for the first time in many years.  According to the NATIONAL ASSOCIATION OF REALTORS® (NAR), the median home price nationwide in December was down 15 percent to $175,400.  With current interest rates at or near historic lows, borrowers with a 10 percent down payment could save $254 per month on a median-priced home compared with a year ago.
• The percentage of households that could afford to buy an entry-level home in California stood at 53 percent in the third quarter of 2008, compared with 24 percent for the same period a year ago, according to the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.).  The minimum household income needed to purchase an entry-level home at $287,760 in California in the third quarter of 2008 was $56,100, based on an adjustable interest rate of 5.91 percent and assuming a 10 percent down payment.    The monthly payment including taxes and insurance was $1,870 for the third quarter of 2008.

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