Well, it is a good news/bad news situation for home buyers and sellers in our local housing market.  The good news is Sacramento County is one of the most affordable areas of the 58 counties in the state for first-time homebuyers.  The California Association of Realtors reported yesterday that 38% of potential home buyers locally can afford to buy a home.

Sacramento County's 38% compares very favorably to just 24% statewide, 25% in the SF Bay Area, and just 14% in Santa Barbara County.  The same survey said that 35% of first-time buyers in the state were able to afford condos.

CAR's "affordability index" assumes a 10% down payment with adjustable rate financing at 6.58%.  Using that formula in Sacramento  County means that it takes a household income of $65,910 and monthly payments of $2,200 (including taxes and insurance) to buy the median-priced home of $319,060.

Even better for buyers is the amount of inventory currently on the market.  With the flood of homes out there homes are staying on the market three to four times longer than just nine months to a year ago causing sellers to become more realistic in order to sell their homes. 

So, where's the bad news?  The bad news is for the sellers who are still holding onto to expectations based on the hot go-go market of the past few years.  That just is not happening.  The key for sellers to price their home to sell today - not trying to get what they might have gotten had they tried to sell a year or more ago. 

Again, this does provide some upside for sellers assuming they are going to purchase another home.  Why?  Well, because the home they are buying will likely be priced lower as well.  In fact, it is conceivable that someone selling today can get more home for less money than they could have a year ago. 

My take on this is the market is transitioning back to equilbrium and will ultimately benefit both buyers and sellers.  Though for the time being it appears that buyers are in the driver's seat.