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ability for credit. <br /> <br />In 1974, FHA interest rates were raised to historic <br />high levels. C0nventidffal loan interest rates are also <br />high. 1974 has been marked by considerable adjustments <br />in the relationships between FHA and conventional loans, <br />These adjustments can be expected to continue since <br />further changes in FHA programs are pending. <br /> <br />· Until 1974, as a general rule lenders would finance a <br />home valued at 2.5 times the yearly income of a family. <br />Recently some lenders have reduced this ratio to 1.5. <br /> <br />1974 median family income was $12,037, which means that <br />more than 50% of the families in Santa Aha could not <br />afford a house with value over $30,093 (using an income <br />multiplier of 2.5) or a house with value over $21,666 <br />(using an income multiplier of 1.8). <br /> <br />Based on the sales market of second quarter 1974 single <br />family (detached) homes in Orange County there were no <br />new single family (detached) homes for sale for less than <br />$31,950. The average base price of the 257 different <br />models in the South and East Orange County Market area <br />(includes Santa Aha) was $65,552 containing 2,038 square <br />feet with a value ratio (price per square feet) of $32.16 <br />and averaging'3.7 bedrooms and 2.4 baths. This means <br />that there were no homes afford in the price range of <br />atleast 50% Of the families in Santa Aha. <br /> <br />Based on second quarter 1974 PUD residential unit con- <br />struction, 61~ of the homes built in Orange County <br />could be afforded by at most 40% of the families in <br />Santa Ans. <br /> <br />Only one of the 57 single family projects surveyed in <br />the South and East Orange County Marketing a~ea in the <br />second quarter of 1974 offered VA financing while all <br />had Conventional financing available. <br /> <br />It is considerably less expensive for a homeowner to <br />remain in his present home than for a. renter to become <br />an owner of a comparable home. This is true because <br />most existing homeowners purchased their homes at lower <br />than current interest rates and at former prices. Un- <br />like renters who have to make a down payment to become <br />owners, existing owners do not have to make a substantial <br />cash outlay to remain homeowners. <br /> <br />Homeownership is less common among low- <br />income groups than higher. Many low in- <br />come households can afford to be homeown- <br />ers despite current low income because <br />they became owners when they were in a <br />higher income group. They bought at <br /> <br /> O000J <br /> <br /> <br />