More home buyers are beginning to see a silver lining shining behind California's clouded housing market.

The state has had one of the highest foreclosure rates in the nation and new and existing sales have been slow. That's left the Golden State bulging at the seams with a swollen inventory of homes for sale.

So where's the silver lining?

Affordability.

Homes are a lot cheaper and so is mortgage money.

The California Association of Realtors (CAR) says 44 percent of the state's households could afford to buy an entry-level home during the first quarter this year. That's almost double what it was a year ago, at 26 percent.

The median income necessary to purchase an entry-level home dropped about $29,000 from $97,000 in April last year to about $68,000 this year.

That's because single-family home prices in California simply crashed in April, falling a whopping 32 percent from a year ago. The median price is now about $200,000 less than it was a year ago, according to the state's Realtor association.

Even land values in some areas have plunged by as much as 65 percent, according to the Hoffman Land Index.

Not a single region escaped double digit home price declines in April.

Seaside resort area Monterey County saw its median home price slashed by more than 47 percent. Sacramento was down 35 percent. San Diego and Los Angeles, both down 27 percent. Santa Cruz and Santa Clara County, the region that includes Silicon Valley, were only down 13 percent each -- the smallest regional price declines in the state.

Also boosting affordability was lenders' recent reduction in interest rates by nearly a full percentage point for jumbo mortgages of up to about $730,000.

But many more homes now qualify for even cheaper mortgage interest rates. The median price of a home in California now stands at about $400,000, down from $594,000 a year ago and below even the old conforming loan level where rates are lowest.

CAR said the minimum household income needed to purchase an entry-level home at $356,350 in California in the first quarter of 2008 was $67,830, based on an adjustable interest rate of 5.65 percent and assuming a 10 percent down payment.

First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. The monthly payment including taxes and insurance was $2,260 for the first quarter of 2008.

At $67,830, the minimum qualifying income was 30 percent lower than a year earlier when households needed $96,500 to qualify for a loan on an entry-level home.

In California, median household income stands at $50,700, according to CAR.

With 64 percent of households with enough income to afford a starter home, Sacramento County and the High Desert region were the most affordable areas in the state. Monterey was the least affordable area in the state at 29 percent, followed by the San Francisco Bay Area at 30 percent. In San Diego it was 41 percent; Los Angeles, 35 percent; Silicon Valley, 31 percent.

Published: June 2, 2008

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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.