Thursday, December 04, 2008

Housing Affordability Reaches All-Time Record High

Thanks to the National Association of Realtors, I was able to get monthly data on the Housing Affordability Index (HAI) back to 1988. As the chart above shows (click to enlarge), the October HAI of 141.8 (a family earning the median family income had 141.8% of the income necessary to qualify for a conventional loan covering 80% of a median-priced single-family home) is the highest level on record, going back at least to January 1988.

As I mentioned in this recent CD post: a) the recent increase in housing affordability is good news for the real estate market, since it will help in the recovery process (i.e. a "Larry Kudlow mustard seed"), and b) this increase in housing affordability, now reaching an all-time historical high, has gone unreported by the media, I still can't find a single news report on this topic.


At 12/04/2008 1:03 PM, Blogger bobble said...

NAR has a history of being overly optimistic on housing. see documentation in this video from an unusual source, the massively irritating glen beck

a contrasting viewpoint ". . . shows that the price-to-income is still too high, and that this ratio needs to fall another 15% or so."

At 12/04/2008 2:35 PM, Blogger Unknown said...

This, of course, is assuming that:

a) you have your 20% down payment in cash (I'm not sure many people had that much money safely sitting in cash), or

b) the equity in your current house has been preserved and you can sell it to someone in the "a" group.

I'll bet the HA index is still too low to really bring new money into housing. After all, it may be more affordable, but that doesn't imply that it's easier to get financing for the house.

At 12/04/2008 4:32 PM, Anonymous Anonymous said...

Yup, problem is no one saving anymore for down payment.

The treasury would have been better off either becoming a free standing mortgage refi/reset company rather than bailing out banks

At 12/09/2008 8:33 AM, Anonymous Anonymous said...

nice post

At 12/20/2008 7:34 AM, Anonymous Anonymous said...

Thanks ur information

it very useful


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