Merced ranks as the 25th most-affordable place to buy a home on the West Coast, the highest the city’s score in eight years.Almost half the houses sold in 2008’s second quarter could be bought by families earning $47,400, the city’s median income, according to a study released this week by the National Association of Homebuilders and Wells Fargo.
Home prices have ratcheted down from the High Sierra and back within the reach of Merced’s residents — a positive note in an otherwise gloomy economy and market.
“It’s great news for the community,” Merced County Association of Realtors President Dorothy Kielty said. “A majority of the houses we’re selling are to first-time home buyers who were priced out of the market.”
The study compares median home prices and median incomes to come up with a housing-opportunity index. Merced home affordability has increased 40 percent points since 2007’s last quarter and even more sharply since the height of the housing boom.
At the market’s peak, only 2.5 percent of the homes sold were within reach of residents with a median income. That figure is now up to 48.6.
The sharp increase in the eligibility of local renters to become homeowners is due to the plummeting cost of houses for the past two years. The median price for a home in 2006 was $376,000. It’s now at $174,000.With those kind of price tags, Kielty said, residents are realizing a mortgage payment would be equal to their rent. One client will be paying a $653-a-month mortgage, she said. Many of the current buyers are entering the market for the first time, seizing on the must-sell pricing.
Kielty said the foreclosure rate should stabilize in the next year, and Merced’s affordability will remain high.But, she cautioned, better-paying jobs must be created because house prices will eventually rise again, putting the house keys out of reach for more residents.