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Merced, Stanislaus counties lead California in home affordability

Stanislaus County homes are the most affordable in California, followed by Merced and San Joaquin counties, a study released this morning showed.

The new calculations show that Stanislaus's median-income families now can afford to buy 71.1 percent of homes on the market. Three years ago, just before the housing bubble burst, only 3 percent of Stanislaus homes were affordable to median-income families.

In Merced, the percentage hit 70.9 percent and in San Joaquin it is 66.4 percent.

It's great news for those wanting to buy homes, but lousy for current owners and those needing to sell. That's because homes have become so affordable due to plunging prices, not soaring incomes.

The National Association of Home Builders/Wells Fargo Housing Opportunity Index released today calculates that Stanislaus home prices peaked at $387,000 during the fourth quarter of 2005. The index shows median home prices plummeted to $160,000 — a 59 percent drop — by the fourth quarter 2008.

That price decline caused the Northern San Joaquin Valley to flip from being among the least affordable places in the nation to buy to now being among the most affordable.

Stanislaus homes haven't been this reasonably priced since 1999, according to the index. The county hit its most affordable level in 1998, at the end of the region's last recession and just before the building surge started. Back then, nearly 80 percent of homes were affordable to median-income families.

Nationwide, the index shows that 62.4 percent of all new and existing homes that were sold in the final quarter of 2008 were affordable to families earning the national median income of $61,500. That is up considerably from the 56.1 percent of affordable homes during the third quarter of 2008 and from 46.6 percent during the end of 2007.

The most affordable major housing market in the country during the fourth quarter was once again Indianapolis, Ind., which has now topped the affordability list 14 consecutive times. There, just over 93 percent of all homes sold in the fourth quarter of 2008 were affordable to households earning the area's median family income of $65,100.

The nation's least affordable major housing market in the fourth quarter was again New York-White Plains-Wayne, N.Y.-N.J., where just under 14 percent of all homes sold during the period were affordable to those earning the median income of $63,000.

Also near the bottom of the affordable list were San Francisco and San Luis Obispo County, both of which were at less than 21 percent.

The index is a measure of the percentage of homes sold in a given area that are affordable to families earning that area's median income during a specific quarter. Prices of new and existing homes sold are collected from actual court records. Mortgage financing conditions incorporate interest rates on fixed- and adjustable-rate loans reported by the Federal Housing Finance Board.

To see all the statistics, visit .