Some industry experts are saying that the housing market may be heading for a slowdown in 2017 based on rising home prices and a jump in mortgage interest rates. One of the data points they use is theHousing Affordability Index, as reported by theNational Association of Realtors (NAR).
Here is howNARdefines 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 during that time the housing crisis left the market with an overabundance of housing inventory with as many as one out of three listings being a distressed property (foreclosure or short sale). 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 and look at the current index as compared to the index from 1990 – 2008:
We can see that, even though prices have increased, mortgage rates are still lower than historical averages and have put the index in a better position than every year for the nineteen years before the crash.
TheHousing Affordability Indexis in great shape and should not be seen as a challenge to the real estate market’s continued recovery.
Author:Jason Asch Phone: 859-653-9286 Dated: January 25th 2017 Views: 157 About Jason: Jason Asch is the team leader of the My NKY Home team and is a career oriented individual whom is ex...
Buying & Selling Real Estate in Northern Kentucky or Greater Cincinnati
Everything you need to know about Buying or Selling a home can be found on this site. As a preeminent REALTOR® in the Northern Kentucky communities of; Boone, Kenton, Campbell & Grant counties, Jason Asch and his team of real estate professionals are truly dedicated to producing the finest service available for their clients. Jason Asch is the #1 Keller Williams agent in Northern Kentucky for Volume and units sold. With over 20 years of full time award winning service use Jason and his team as a resource for your next move.
Located in this site you will find: homes for sale, real estate news and resources updated on a daily basis, complete information on how to buy a home, area & school information for relocating transferees, statistical reports pertaining to market conditions and other tools that maximizes information for the real estate consumer.
Professional Team Qualities:
Multiple agents with over 20 years of full time service
Proficient in web & graphic design services
Experienced in photography and digital enhancements
Skillful in analyzing market statistics and trends
Extremely energetic and enjoys working with people
Be Careful Not to Get Caught in The Rental Trap!Here are many benefits
"MyNKYHomeTeam did an excellent job of helping with our home purchase. They were very knowledgeable with the area and the market we were looking for. Couldn't have done it without them and would highly recommend them for anyone looking to purchase and/or sell a home. They also had a great repaired with other agents in the area, making the sales process very easy."