The South Coast Real Estate Round-Up

Home Affordability Sets a New Highs

January 14th, 2013 8:28 AM by Christopher Terry

In 1970 NAR (the National Association of Realtors) started tracking home affordability. The home affordability index compares the relationship between the median family income, the median home price and the median mortgage rate. The higher the index the greater the household purchasing power.

An index of 100 is defined when a family with a median income has exactly enough income to purhcase a home at the median price at the median interest rates assuming a 20% down payment with 25% of their income going to principle and interest.

NAR projects that for all of 2012 the index will be a record 194, up from 2011 record of 186. Which means that in 2012 the average median income family had 194% of the income needed to purchase an median priced single family home.

NAR expects the index to average 160 for 2013, a result of rising home prices and a gradual upward trend in interest rates. However this will vary depending on location.

There's no doubt that 2012 was the year of afforbability if you were in the market to purchase a home and IF you were able to qualify for a home mortgage. Excessively tight underwriting standards eliminated many would be homebuyers from locking in generationally LOW interest rates. The good news is that the window remains open for those buyers that do qualify for a mortgage as NAR expects 2013 to be the third best year on record for home affordability.

Here's an example of one of our newest listings and just how affordable owning a home of your own has become:

The current asking price of this 3 bedroom 1.5 bath townhouse makes the cost to own this home substantually less than the cost to rent a similar home. If you are interested in owning a home of your own, looking for help finding money-saving financing options or just looking to get on track give us a call at 508-646-4777. Our experience, plus our network of home buyer service providers can help you make the best purchase decisions possible.

Not ready to speak with a real estate professional? No Worries. Here's access to our FREE money-saving home buyer guide:

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Christopher Terry is a licensed real estate broker in Ma and RI, has completed the Accredited Buyer Representative Certification, is a graduate of the Certified Distressed Property Institute, holds the prestigious CDPE designation and is the founder of EZ Home Search Real Estate Inc.  

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Posted by Christopher Terry on January 14th, 2013 8:28 AM


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