Sunday, January 13, 2008

NAR: Housing Affordability is at 4-Year High

According to the National Association of Realtors (NAR), the Housing Affordability Index in late 2007 was at the highest level since 2004 (see graph above), due to falling single-family home prices, rising median family incomes, and declining mortgage rates (see post below).

To interpret the
Housing Affordability Index (HAI), a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20% down payment.

For example, the composite HAI of 119.3 in November 2007 means a family earning the median family income ($59,833) has 119.3% of the income necessary to qualify for a conventional loan covering 80% of a median-priced existing single-family home ($208,700), financed at the effective rate on loans closed on existing homes of 6.41%. The increase in the HAI shown above in the graph means that the typical family is more able to afford the median priced home today than at any time since 2004.

Bottom Line: Falling home prices, increasing income levels, falling mortgage rates, and an increasing housing affordability should help offset some of the troubles in the mortgage and housing markets.

5 Comments:

At 1/13/2008 4:05 PM, Anonymous Victor said...

This summer, I will be a first time home buyer. My wife and I should end up well above the median income levels that were indicated in the post. I am extremely happy with the trend in this housing market. I am hoping that by the time that I am ready to buy a house, sellers will be past desperate!!

I know that it is not "right" to profit on others misery. The longer this crisis continues, the better off I will be.

 
At 1/13/2008 4:30 PM, Anonymous Anonymous said...

Consider the source these guy's have zero credibility. Buyer beware.

 
At 1/13/2008 7:00 PM, Anonymous Anonymous said...

COMPOSITE HOME PRICE INDEX (CUS)

http://quotes.ino.com/exchanges/?r=CME_CUS

 
At 1/13/2008 7:35 PM, Blogger juandos said...

"I know that it is not "right" to profit on others misery. The longer this crisis continues, the better off I will be"...

Not rigfht?!?! According to whom???

What's wrong with taking advantage of someone's SELF INFLICTED misery?

anon @ 4:30PM whines: "Consider the source these guy's have zero credibility. Buyer beware."...

YOU of course have something credible to back that bit of slander, right?

 
At 1/13/2008 8:12 PM, Blogger Leo said...

real estate prices in canada have remained relatively firm. this is RBC's affordability index which gets a lot of media play up here. (it's the most recent i could find.) the charts are informative but not "intuititive" ie trending up means the homes are less affordable. see how much household income goes to housing in vancouver? http://tinyurl.com/lzpzk

 

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