Another drop in housing affordability for Californians is further evidence next year's conforming loan levels are virtually meaningless for many Golden State home buyers.

One in three California households can now afford the state's median priced home, a drop of 7 percent from a year ago October, and down from 31 percent in September, according to the California Association of Realtors' monthly housing affordability index.

The numbers are worse for Northern California communities, including Monterey County, the worst in the state, where only 13 percent of the households can afford the median priced home.

In San Francisco and Santa Clara (Silicon Valley) counties, fewer than one in five households could afford the median priced home in October, according to CAR.

For those who can't afford a piece of the rock with a single-family home attached, less expensive air space wrapped in a condo is becoming a popular option.

Single-family detached home sales dropped to 75.5 percent of the market in 2000, compared to 82.2 percent in 1999, while condo sales rose from 7.5 percent to 8.2 percent, according to CAR's 2000 Annual Housing Finance Study.

"Higher home prices and affordability concerns increased the sales of smaller single-family detached homes and pushed some home buyers, especially at the lower and moderate end of the market, into lower-priced condominium alternatives," said CAR President Gary Thomas.

The median price of single-family detached homes in October 2000 was $252,510, a 17.0 percent increase over the $215,820 median for October 1999, CAR said.

Other buyers were simply pushed out of the market. First-time home buyers were particularly hard hit in 2000, as the proportion of first-time home buyers in the market dropped from 42.4 percent last year to 39 percent in 2000 -- the lowest first-time buyer market share in a decade.

Conforming to what?

News of California's heighten affordability woes comes on the heels of Freddie Mac and Fannie Mae announcing next year's new $275,000 conforming loan rate with estimates that some 150,000 additional families nationwide will benefit from the higher limits.

Some 18,500 families in California will feel the trickle down effect, according to CAR, but fewer than 20 properties on the market today in Silicon Valley would benefit from the higher conforming loan limit, according to Richard Calhoun a realty statistician and broker-owner of Creekside Realty in San Jose, CA.

The conforming loan level is the largest loan Freddie Mac and Fannie Mae will buy from lenders and conforming mortgage loans cost less to finance than non-conforming or larger "jumbo" loans.

The average jumbo loan was 0.49 percent more expensive than conforming loans Dec. 8, according to Bankrate.com.

The conforming level's increase from $252,700 in 2000 to $275,000, effective Jan. 1, 2001, reflects an 8.83 percent increase in home prices nationwide from October 1999 to October 2000, about half the increase in California's cost of housing.

In Silicon Valley prices rose 34 percent -- almost four times as much as the conforming loan increase -- from $395,000 in October of 1999 to $530,000 this October, according to Calhoun.

"I would expect it only to get worse in the near future so buy now, Calhoun urges buyers as the state's economy continues to chug along, thumbing it's nose at Wall Street woes and "dotcombustion."

The National Association of Realtors and CAR are planning legislation this year to give buyers in California and other expensive markets greater access to cheaper loans by extending so-called "high-cost area" status to additional markets.

Only legislated changes to Freddie Mac's and Fannie Mae's charters can accomplish that. The charters currently extend so-called "high-cost area" status only to Alaska, Guam, Hawaii and the Virgin Islands. The designation gives those areas conforming loan amounts 50 percent higher than elsewhere. In those high cost areas, levels will rise from $379,050 this year to $412,500 next year.

If Silicon Valley shared that distinction, hundreds of existing homes for sale would benefit, instead of a handful, according to Calhoun.

By some measures, California has a higher cost of living than Hawaii and Alaska. The Department of Labor's Consumer Price Index, a measure of inflation that's often included in cost of living comparisons, for example, gives Anchorage, Alaska an index of 150 and Honolulu, Hawaii an index of 175.9 for the first half of 2000. The two areas are indexed only twice a year, but the indexes reveal lower CPIs than other areas that don't have the conforming loan high-cost area designation.

The latest CPI for San Francisco-Oakland-San Jose was much higher at 183.4. The Los Angeles-Riverside-Orange index was 173.8, according to the labor department's October CPI numbers.

All CPI numbers are based on an index of 100 for the years 1982 to 1984, the department said.

There are also compelling home price statistics from the Federal Housing Finance Board's data bank. Fannie Mae and Freddie Mac use the board's data to establish the new conforming levels.

The housing finance board says the average 1999 home purchase price in Hawaii was $263,300, compared with $277,100 in California -- the highest in the nation.

The board's more recent third quarter 2000 data for metropolitan areas also reveals higher housing costs in California than those in Hawaii. Honolulu had a $268,100 average purchase price compared to $402,300 for the San Francisco-Oakland-San Jose area; $313,500 for San Diego and $280,900 for Los Angeles-Riverside-Orange County.

Getting an equally split Congress to dole out more high-cost areas, however, won't be easy. "Anytime you open up a charter it's a politically difficult situation," said Marcia Salkin, CAR's director of public policy in government affairs.