The CAR's survey, the First-time Buyer Housing Affordability Index, measures the ability for residents to purchase a home at 85% of the median price for their area. Based on current interest rates and the new median home price in Southern-California those with a yearly income of almost $68,000 would find purchasing a home in the area to be affordable.

The rise in affordability is being seen across the Golden State. Leslie Appleton-Young, vice-president and chief economist for the California Association of Realtors is optimistic about a turnaround in the market. �Essentially we're working our way out of the downturn and coming back up," adding "I think they are going to make a dent in the supply. Is it going to evaporate overnight? Absolutely not. It will be a slow workout. We're still into the wave of foreclosures."

A separate survey conducted by Wells Fargo and the National Association of Home Builders indicated that home prices in Southern California have dropped by 8% compared with a year ago. However borrowers seem to be reluctant to enter the market as lenders require higher down-payments and better credit scores. Many analysts expect the housing market to continue slumping through 2008 with the possibility of a turn-around in 2009.

This news coupled with Fannie Mae lowering down payment requirements makes me feel like a turn-around is in our near future!