Housing Affordability Index: Surprise, It's a Buyer's Market
The National Association of Realtors released its latest report today on the Housing Affordability Index [HAI] for April, showing a slight decline to 129.4 from the March level of 130 (see chart below) due to a slight increase in median-price home in April.

A composite HAI of 129.4 means that a family earning the median family income in April ($60,185) had 129.4%% of the income necessary to qualify for a conventional loan (at 6.03%) covering 80% of a median-priced existing single-family home in April ($200,700).
Since July 2007 when the HAI was at only 103.6 (due to higher home prices and interest rates, $228,500 and 6.8% respectively), the 25.8 point increase in housing affordabilty to 129.4 in April should continue to play an important role in the recovery process for the slumping real estate market. It's a buyer's market.
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This article has 6 comments:
spenser
Many housing markets are still priced excessively. Many owners still wish to believe that their houses are worth 3 to 4 times their pre-bubble prices. Affordablity is still a major factor is many markets, especailly with family budgets strained by rising food and energy prices. However, prices are coming down and caution is the order of the day.
There are areas that may be safer to buy. I have read that parts of of your state, Michigan (Detroit), have seen their housing markets decimated. But if a midwesterner like yourself comes out to sunny California, you probably will not write an article with the title listed above. Prices are lowering, but it's still a SUCKER'S MARKET.
I run a real estate market research company and we think that affordability is one of the most critical indicators of the overall health of a given real estate market - and yet we see very little discussion today focused on restoration of affordability. It's common sense, but you'd be amazed how much teeth gnashing is going on in markets that are very poorly affordable for single family, though multifamily investors are fat and happy in those very markets.
Good for you for thinking about affordability issues, there needs to be a lot more attention to the affordability issue in the upcoming months. This would be a prime opportunity for realtors and brokers to come out and support a concept that would truly help consumers across the nation, though most realtors and brokers have no concept of the issue.
Mark McGlothlin, MD
RedfishEmergingMarkets...