Saturday, January 7, 2012

Might as well buy a crib...oh wait I'm broke.

The National Association of Realtors has put out the Housing Affordability Index since the early 1980's. The higher the index value the more able a household earning the median income is able to purchase and make mortgage payments on a home.

Measures the degree to which a typical family can afford the monthly mortgage payments on a typical home. 
Value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment. For example, a composite housing affordability index (COMPHAI) of 120.0 means a family earning the median family income has 120% of the income necessary to qualify for a conventional loan covering 80 percent of a median-priced existing single-family home. An increase in the COMPHAI then shows that this family is more able to afford the median priced home.
As you can see now, the 2007 Recession has clearly brought homes to their all time most affordable levels.  If I had cash I might buy a home right now, but i don't and the 14 million unemployed or so don't either.  Womp.

What a value of around 195 means is that a family earning a median income has 195% of the income necessary to qualify for a conventional loan covering 80 percent of a median-priced existing single-family home.  By historical standards never has it been the best and worst time to buy a home. The best opportunity, under the worst circumstances.  

Keep dancin'

Steven J.


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