Friday, January 30, 2009

Housing Affordability Surges to Record High in Dec.

The National Association of Realtors (NAR) released its latest Housing Affordability Index (HAI) today, showing that housing affordability reached an all-time record high of 158.8 in December (see chart above).

A HAI of 158.8 would mean that the typical household earning the median family income of $61,058 in December would have 158.8% of the qualifying income to purchase a median-priced existing single-family house ($174,700) with a 20% down payment, which would be the highest level of housing affordability since the NAR started reporting housing affordability in 1971. Since mid-2006, the HAI has risen by almost 60 points, from 100 to 158.8 (see chart).

Stated differently, the annual qualifying income required to purchase a median-price house (with a 20% down payment) is only $38,448, with monthly payments based on a 5.59%, 30-year fixed-rate mortgage ($801 per month for principal and interest). Given the median family income of about $61,058, the typical family would have 158.8% of the income required to qualify for the mortgage to purchase the $174,700 home.

Hopefully, the increase in housing affordability and new record-high will play an important role in the real estate market's recovery. Interestingly, the record-high level of housing affordability has not yet been reported, or at least I couldn't find a single news report on this topic.

10 Comments:

At 1/30/2009 12:55 PM, Anonymous Anonymous said...

If that is the case, why is NAR asking for a tax break for new home buyers? In a free market, would we not all be rushing to buy houses?

 
At 1/30/2009 1:39 PM, Anonymous NeuroAZ said...

That's great and all, but who has 20% these days?

 
At 1/30/2009 2:14 PM, Blogger 1 said...

"If that is the case, why is NAR asking for a tax break for new home buyers?"...

Well if the porn industry can ask for one, why not the National Association of Realtors?

The Catfish Industry is asking for one too...

"That's great and all, but who has 20% these days?"...

I can...

 
At 1/30/2009 2:16 PM, Anonymous joe armendariz said...

This is good news for many families. However, the median price in Carpinteria, CA is $900,000.

 
At 1/30/2009 6:30 PM, Anonymous poor boomer said...

Actually, housing affordability for renters is at very low levels.

The claims of NAR should hardly be a surprise, since NAR has billed itself as representing America's homeowners.

Who represents America's renters?

 
At 1/30/2009 6:32 PM, Anonymous poor boomer said...

1 said:

"That's great and all, but who has 20% these days?"...

I can...



You can has cheezburger?

 
At 2/01/2009 8:18 AM, Blogger 1 said...

"You can has cheezburger?"...

Hmmm, I'm sure that means something poor boomer but what?

BTW your question: "Who represents America's renters?"...

Well odd son, here's YOUR chance to stand tall and start an organization to represent renters...

 
At 2/01/2009 12:03 PM, Anonymous poor boomer said...

1 said:

"You can has cheezburger?"...

Hmmm, I'm sure that means something poor boomer but what?

BTW your question: "Who represents America's renters?"...

Well odd son, here's YOUR chance to stand tall and start an organization to represent renters...



Was just being a little silly (I assume you're familiar with the website reference). "I can" struck me as an odd reply to the question..."but who has 20% these days? - I took that as "I can has 20%".

As for startng an organization to represent renters, sure I've thought about it. But with no money I feel tightly constrained.

 
At 2/02/2009 10:22 AM, Anonymous Anonymous said...

Yeah, well, that's not surprising when you throw a doctor's salary in Beverly Hills into the same data set with $10,000 houses in Detroit....something has to give and in this case it's the HAI....it's going through the roof!

 
At 4/15/2009 3:20 AM, Anonymous Anonymous said...

OK, housing affordability is up because prices are down. However, my understanding is that the financial shock is quickly reducing unemployment, and, therefore, incomes. So, can we expect the reverse to soon occur?

 

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