In January the National Association of Realtors (NAR), Housing Affordability Index soared to 206.1. “This is the first time the housing affordability index has broken the two hundred mark, meaning the typical family has roughly double the income needed to purchase a median-priced home,” stated NAR President Moe Veissi.
NAR announced that the Housing Affordability Index has hit the highest level in recorded history. The recordkeeping for the index began in 1970. From a historical perspective, in 1970 the average price of a gallon of gas was 36 cents; median price of a new home was $26,600; and the average price of a loaf of bread was 36 cents.
The index is designed so that a score of 100 indicates that a median-income family could qualify for a median priced existing single family home. (Index assumes 20 percent down payment with 25 percent of gross income allocated to mortgage principal and interest) “For buyers who can qualify for a mortgage, now is a very good time to become a homeowner,” declared Veissi.
The NAR President projected, “If access to credit improves, we could see a much more meaningful increase in home sales and broader stabilization in home prices with modest gains in areas with stronger job growth.”
Housing analysts forecast little change in mortgage interest rates and housing prices during the remainder of 2012; therefore affordability is expected to remain strong through year’s end.
Source: National Association of Realtors, REALTOR.org, Article: Housing Affordability Index Hits Record High. Published March 6, 2012