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.

For more articles by Broderick Perkins, please press here.

Published: November 8, 2001

Use of this article without permission is a violation of federal copyright laws.

Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.