CALIFORNIA'S HOUSING AFFORDABILITY INDEX AT 19 PERCENT IN SEPTEMBER The percentage of households in California able to afford a median-priced home stood at 19 percent in September, a 5 percentage-point decrease compared with the same period a year ago when the Index was at 24 percent, according to a recent C.A.R. report. The September Housing Affordability Index (HAI) increased 1 percentage-point compared with August, when it stood at 18 percent. C.A.R.'s monthly housing affordability index measures the percentage of households that can afford to purchase a median-priced home in California. The index is the most fundamental measure of housing well-being in the state. The minimum household income needed to purchase a median-priced home at $465,540 in California in September was $107,880, based on an average effective mortgage interest rate of 5.70 percent and assuming a 20 percent downpayment. The minimum household income needed to purchase a median-priced home was up from $91,030 in September 2003, when the median price of a home was $384,690 and the prevailing interest rate was 5.94 percent. At 42 percent, the High Desert region was the most affordable region in the state, followed by the Central Valley region at 26 percent. The Santa Barbara region was the least affordable in the state at 6 percent, followed by the San Diego region at 11 percent.

BUILDER CONFIDENCE HOLDS STRONG AND STEADY IN NOVEMBER Continuing low mortgage rates and improving economic conditions have helped reinforce builder confidence in the market for new single-family homes, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The November HMI stood at 71, registering no discernible change in builder attitudes following a four-point increase in October.

NET COST OF LOAN ORIGINATION FELL 26 PERCENT IN 2003 According to the Mortgage Bankers Association's 2004 Cost Study, the net cost of originating a loan in 2003 was $739 on a per-loan basis. Calculated as the origination fees less associated expenses such as loan officer and broker commissions, overhead and production support expenses, last year's net cost of loan origination decreased 26 percent from 2002. Mortgage banks with the highest average percentage of purchased production had the lowest net cost to originate, coming in at $480 per loan. The 2004 Cost Study analyzed trends in income, expenses, productivity and profitability for one- to four-unit residential mortgage operations through 2003. The study also found that servicers of all sizes continued to struggle financially, largely due to heavy amortization of mortgage servicing rights. Servicing financial losses averaged $166 per loan in 2003, according to the report.

HOUSING STARTS REBOUND SHARPLY IN OCTOBER According to a report released by the U.S. Dept. of Commerce today, housing starts increased 6.4 percent to a seasonally adjusted annual rate of 2.03 million units in October. Single-family starts increased 5.7 percent to reach a seasonally adjusted annual rate of 1.65 million units, while multifamily starts rose 9.5 percent to rate of 382,000 units. Regionally, the Northeast posted the biggest increase in housing starts at 20 percent, followed by an 8.6 increase in the Midwest. The West and the South improved by 5.0 percent and 4.0 percent, respectively. The number of building permits issued, which can be an indicator of future building activity, declined slightly, falling 0.7 percent to a seasonally adjusted annual rate of 1.98 million units.

Information provided by - C.A.R. Newsline is published by the CALIFORNIA ASSOCIATION OF REALTORS®, a trade association representing more than 135,000 REALTORS® statewide.