The REAL News about Housing Affordability: Some industry experts are claiming that the housing market may be headed for a slowdown as we proceed through 2017, based on rising home prices and a potential jump in mortgage interest rates. One of the data points they use is the Housing Affordability Index, as reported by the National Association of Realtors (NAR).
Here is how NAR defines the index:
“The Housing Affordability Index measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national level based on the most recent price and income data.”
Basically, a value of 100 means a family earning the median income earns enough to qualify for a mortgage on a median-priced home, based on the price and mortgage interest rates at the time. Anything above 100 means the family has more than enough to qualify.
The higher the index, the easier it is to afford a home.
Why the concern?
The index has been declining over the last several years as home values increased. Some are concerned that too many buyers could be priced out of the market.
But, wait a minute…
Though the index skyrocketed from 2009 through 2013, we must realize that during that time, the housing crisis left the market with an overabundance of distressed properties (foreclosures and short sales). All prices dropped dramatically and distressed properties sold at major discounts. Then, mortgage rates fell like a rock.
The market is recovering, and values are coming back nicely. That has caused the index to fall.
However, let’s remove the crisis years (shaded in gray) and look at the current index as compared to the index from 1990 – 2008:
Though prices and rates appear to be increasing, we must realize that affordability is composed of three ingredients: home prices, interest rates, and income. And, incomes are finally rising.
ATTOM Data Solutions recently released their Q1 2017 U.S. Home Affordability Index. The report explained:
“Stronger wage growth is the silver lining in this report, outpacing home price growth in more than half of the markets for the first time since Q1 2012, when median home prices were still falling nationwide. If that pattern continues, it will help turn the tide in the eroding home affordability trend.”
Compared to historic norms, it is still a great time to buy from an affordability standpoint.
This Tree-Lined South Claremont Neighborhood is Hot for Homebuyers! [Video] This neighborhood is tree lined with California “Live Oaks”, Crape Myrtle and Elms. Often over
Supply and Demand Problem Plaguing New Construction Builders. Last week at the National Association of Real Estate Editors 51st Annual Conference, CoreLogic
Do You Know How Much Equity You Have in Your Home? If you are one of the many Americans who is unsure of how much equity you have built in your home…
4 Great Reasons To Buy A Home This Summer. The bottom in home prices has come and gone. Home values will continue to appreciate for years. Waiting no longer
Selling Your House Summer 2017 E-Book. Here are five reasons listing your home for sale this summer makes sense. 1. Demand Is Strong
69% of Buyers are Wrong About Down Payment Needs. Nearly 40% of mortgage industry professionals surveyed believe that a lack of knowledge about the…
If Your Home Hasn’t Sold Yet. Definitely Check the Price! Home sales have bounced back solidly and are now at their fourth highest pace over the past year.
The latest Buyer Traffic Report from the National Association of Realtors (NAR) shows that buyer demand remains very strong throughout the vast majority…
What Would You Sacrifice to Save For Your Next Home? [INFOGRAPHIC] The answer to this question about sacrificing will surprise you…
These six tips to sell your home fast, for top dollar will improve your property’s appearance to buyers and facilitate a quicker sale.
Today, there are many questions your real estate agent must be able to answer to ensure your family is making the right decision. Here are just a few:
#1 Reason to List Your House for Sale, NOW! The chart below details the year-over-year inventory shortages experienced over the last 12 months:
Housing Inventory Challenges Causing Home Sales To Slow: New home prices slowed as builders have started to turn their focus toward single family, smaller
Six Tips To Sell Your Home Fast! Money is well spent on these six areas of your home to enhance the appearance and facilitate a quicker sale
How’s The Real Estate Market? Read What The Experts Are Saying: “I am guessing we will see it get even better… If you are considering moving, it could be a
More Families Chose to Own a Home Than Rent in Q1. This marks the first time since 2006 that the number of new homeowner households outpaced the number of
When Is A Good Time To Rent A Home or Apartment? Regardless, we want to make certain that everyone understands that today is NOT a good time to rent.
5 Reasons Why You Should Use a REALTOR When Buying and Selling A Home in your corner haven’t changed, but have rather been strengthened by the projections..