The 'REAL' News about Housing Affordability
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.”
Bottom Line
Compared to historic norms, it is still a great time to buy from an affordability standpoint.
Buying this Spring? Be Prepared for Bidding Wars
Buying this Spring? Be Prepared for Bidding Wars
15,014 Homes Sold Yesterday… Did Yours?
15,014 Homes Sold Yesterday… Did Yours?
There are some homeowners that have been waiting for months to get a price they hoped for when they originally listed their house for sale. The only thing they might want to consider is... If it hasn't sold yet, maybe it's not priced properly.
After all, 15,014 houses sold yesterday, 15,014 will sell today and 15,014 will sell tomorrow.
15,014!
That is the average number of homes that sell each and every day in this country, according to the National Association of Realtors’ (NAR) latest Existing Home Sales Report. NAR reported that sales are at an annual rate of 5.48 million. Divide that number by 365 (days in a year) and we can see that, on average, over 15,014 homes sell every day.
The report from NAR also revealed that there is currently only a 3.8-month supply of inventory available for sale, (6-months inventory is considered ‘historically normal’).
This means that there are not enough homes available for sale to satisfy the buyers who are out in the market now in record numbers.
Bottom Line
We realize that you want to get the fair market value for your home. However, if it hasn't sold in today's active real estate market, perhaps you should reconsider your current asking price.
Again… You Do Not Need 20% Down to Buy NOW!
Again… You Do Not Need 20% Down to Buy NOW!
Home Prices Up 6.15% Across the Country!
Home Prices Up 6.15% Across the Country!
Consumer Confidence in Economy & Housing is Soaring
Consumer Confidence in Economy & Housing is Soaring
Looking to Move-Up to a Luxury Home? Now’s the Time!
Looking to Move-Up to a Luxury Home? Now’s the Time!
Millionaire to Millennials: Buy Now!
Millionaire to Millennials: Buy Now!
Renting or Buying… Either Way You’re Paying a Mortgage
Renting or Buying… Either Way You’re Paying a Mortgage
How Low Supply & High Demand Impacts the Real Estate Market