California price caps give first-time home buyers a break

Agents take notice: Buying a home in California just got a little easier for first-time buyers.

New price caps, being implemented in 56 of the state's 58 counties by the California Housing Finance Agency (CalHFA) are the highest allowable price caps under federal law, agency officials said. The most significant increases were in the counties of Alpine, Calaveras and Tuolumne.

Real estate agents are wise to advise their potential customers that the additional financial wiggle room from the CalHFA gives them a leg up in one of the most expensive real estate markets in the U.S. The median price of an existing, single-family detached home in California during July 2004 was $463,540, a 21.4 percent increase over the revised $381,940 median for July 2003, according to the California Association of REALTORS®.

There are four price points under the revised sales price limits, including one for new housing in areas the agency labels targeted and one for new housing in nontargeted areas. Similarly, there are targeted and nontargeted areas for resale properties. The targeted areas are considered economically distressed.

For example, the price limit for new housing in Los Angeles County is $482,912, up from $448,259, in nontargeted areas, while it is $590,226 in targeted areas, up from $547,873. For resale housing, the nontargeted limit is $416,106, up from $371,153, and the targeted limit is $508,754, up from $452,409.

"We're thrilled to be able to increase the advantages for many first-time homebuyers in our state with our revised sales limits," says CalHFA Executive Director Theresa A. Parker. "Homeownership continues to be one of the most solid and durable investments a California family can make. And, our recent revisions give even more strength and versatility to our homeownership programs."

A good investment, indeed, but the soaring home prices in California – especially the southern parts of the state – have made buying a home seem like a pipe dream for many people. Statewide, the 10 cities and communities with the greatest median home price increases in July 2004 compared to the same period a year ago were: Seaside, 82.8 percent; Laguna Beach, 65.7 percent; Loma Linda, 63.9 percent; Montebello, 63 percent; Santa Paula, 56.2 percent; California City, 55 percent; Adelanto, 54.8 percent; Rancho Santa Margarita, 51.1 percent; Yucca Valley, 50 percent; Oceanside, 48.4 percent.

Instead of opting for interest-only loans or other types of risky financing, the CALFHA aims to provide affordable housing opportunities by offering below-market interest rate mortgage loans to very low-to-moderate income first-time homebuyers. As a completely self-supporting state agency, bonds are repaid by revenues generated through mortgage loans, not appropriated taxpayer dollars.

"CalHFA is probably one of the best deals going … with the least-publicized programs out there, and it's something that buyers should look at," Jim Link, executive vice president of the Van Nuys-based Southland Regional Association of REALTORS®, told the L.A. Daily News.