Bad news for sellers is good news for buyers -- thanks to rising inventories, falling home sales and record low mortgage rates, more buyers can afford to live in the Golden State.

The percentage of households in California able to afford a median-priced home inched up again by one percentage point in September, compared to a year ago, according to the California Association of Realtors.

CAR's September 2001 Housing Affordability Index (HAI) stood at 32 percent, up one point from 31 percent both in September 2000 and August 2001, CAR said.

The median price of single-family homes in California rose 12.3 percent in September, compared to a year ago, but record low mortgage interest rates near the 6 percent mark improved affordability.

"That is the good news. But remember affordability is still low. Last time it was low we had high rates so prices could appreciate. I don't think rates will be lower so there will be continued pressure to keep prices low," said Richard Calhoun, broker/owner of Creekside Realty in San Jose, the county seat for Santa Clara County/Silicon Valley.

Falling prices in Silicon Valley, coupled with low mortgage rates, boosted affordability there. Now more than one in four, 27 percent, of households can afford a home at the median-price, which has fallen from $577,000 in January to below $500,000 this year. That's up from one in 5, 20 percent, a year ago and 25 percent in August.

Silicon Valley home prices fell to the $500,000 mark in September and are expected to be below that mark when Calhoun's Bay-area "Real Estate Market Newsletter" is released next week.

New home builders have begun to take referrals from real estate agents, sellers are dusting off concessions and buyers are haggling over swollen inventories after the area's heavy reliance upon jobs and income from the technology industry caused the Silicon Valley region to suffer economic turmoil earlier than the rest of the state and the nation.

CAR's monthly housing affordability index is the most fundamental measure of housing well-being in the state.

With a 15 percent HAI, up from 13 percent a year ago, San Francisco remained the state's least affordable area.

With a 68 percent HAI, up from 67 percent, the arid High Desert region in Southern California remained the least expensive housing market.

The least expensive heavily populated area was San Bernardino, where 55 percent of all households could afford the median priced home, up five points from a year ago.

Some areas in California continue to see rising prices that are pushed affordability down, including the cities of Sacramento and Palm Springs, the Central Valley region and, Riverside, Fresno, Merced and Stanislaus counties.

Affordability was unchanged in the city of Monterey and San Joaquin County.

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