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:
The “Real” News about Housing Affordability
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.”
Bottom Line
Compared to historic norms, it is still a great time to buy from an affordability standpoint.
Michael Jacksons Sister, LaToya Loses Home to Foreclosure
Word has it that LaToya Jacksons condo in Las Vegas was auctioned at forelcosure August 31... The 1,856 Sqaure foot condo located the the exclusive Regency Towers located at the Las Vegas Country Club, had $750000 in notes. It appears that she went into default in...
Wells Fargo Gives VP the Boot!
It appears that Wells Fargo plays no games with it's execs that take advantage of the system. Cheronda Guyton, a VP in Wells Fargo Foreclosure Assets division (and USC Graduate) was giving the "boot" after word spread that she was living in a recently "foreclosed"...
First Time Home Buyers Tax Credit Ends November 30, 2009
If your considering purchasing your first home...don't wait much longer to take advantage of the $8000.00 tax credit. You must meet the qualifications of the 1st Time Home buyer to Qualify. The tax credit is up to 10% of the purchase price of the property not to...
Home Prices Stabilizing? Not in the Immidiate Future
Another great article from our good friends at The Truth About Mortgage .com. The reason we read their articles is that they tell the truth and no sugar coating necessary... No spin...no hype. Fact is, the housing industries strategists are spinning their data to show...
1000 Banks Expected to Fail Over the Next 10 Years
In a recent article by The Truth About Mortgage .com, John Kanas (Heads BankUnited) states that he expects over 1000 bank failures over the next 2 years...primarily due to the mortgage crisis... "So far this year, 81 banks have failed, a large number by any stretch,...
Current State of The Real Estate Market
Tim Harris...Real Estate State of The Union You're under water and can't see the sky...listen now. Agents...you need to get involved and help your community. As a Real Estate Agent, you can't simply rape and pillage during these times...make a difference in your...
Wilshire…Say It Aint So! Foreclosure Over A Great Offer???
AKA...Quality Loan Service Corp.... This one has me baffled, these days most lenders have adopted some "new" process or rule when dealing with Short Sales. Story goes like this: We listed a home that had a pending foreclosure date about 7 months ago. Offers started...
Short Sale or Foreclosure…..Risks To Consider
The housing market is crashing, many families have felt the strain of loosing one or both incomes. We are working with a family right now that is loosing their home due to job loss for one and reduced hours for the other. They could not afford to keep the home with...
A Candid Conversation with a bank negotiator….Short Sale Style!
It's not often that I get a Short Sale Negotiator on the phone that has the willingness, skill and desire to do their job. I had spent the entire morning on calls to multiple lenders, my last call was to Washington Mutual. While on hold trying to find out why it had...
President Obama, Stop Talking and DO SOMETHING!!!
Enough already! I'm sick of the lip service.... Hope for Homeowners is an embarrassment to Mr. Obama. If you live in California, you have realized that a loan modification is easier said than done.... Lenders have been instructed to help their borrowers find...
“Wachovia Short Sale” will Change the Real Estate Industry
Check this out…Wachovia is setting the benchmark for the Short Sale process…the days of 30, 60, 90 days waiting for a short sale approval are over. Today on a call with Robert “Bobby” Jackson; Asset Manager, Wachovia, we were treated to one of the most exciting and...
Some Light Reading…Life In The World Of A Short Sale Real Estate Agent
Today was one of those days... Up's and down's from the moment the phone calls started at 6:00AM. In the world of Short Sales, there are so many moving parts. Usually a seller has 2 loans to deal with and most of the time they're not the same lender. Needless to say...
Short Sale? What To Expect When You Get An Offer
Once you have listed your home for Short Sale, you have agreed to let the bank/your lender decide the ultimate "Terms" on which the home will be sold. A Short Sale is unique. Although you are the homeowner according to the note & or deed recorded when you...
Short Sales..Recourse Loans…Foreclosure…Deed-in-Lieu
If there was a way to put a dollar in the piggy bank for every question we are asked about recourse loans and what the lender is going to do in the future....well...let's just say we could afford some great dinners on a regular basis! Being Real Estate Agents...
Don't Believe Everything you hear about Short Sales….
It's amazing the crazy things that "professionals" in the Real Estate industry are out telling the public! At a recent listing appointment I was shocked to hear from the homeowners that they were told by a "Short Sale Expert", that their lender would rather foreclose...
Obama Administration To Incentivize Servicers When They Approve Short Sales!
It's not everyday that we get such amazing news from the White House....today the Obama administration announced new and updated details regarding the Making Homes Affordable (MHA). Program updates include details on Foreclosure Alternatives. These alternative will...
Got Patience?….Someone Say Short Sales….
Great news today for anyone contemplating a Short Sale....Also validation that Banks don't want to Foreclose if there is another alternative. Citi Mortgage announced that their pre-foreclosure preventions outweighed their Foreclosures 10 to 1 during the first...
Should I Short Sell or Foreclose?
We still get asked this frequently. In today's market, the short sale is widely accepted and looked at favorably by the banking industry. Why? Simply said, banks net more money from a short sale on average than they do an foreclosures...as much as 15 % more. The cost...