Housing Affordability Index is at Record High in 2009
What does that mean to you ? Simple ! This is probably the best time to purchase a property in your lifetime, especially if you are a first time homebuyer ! Even though interest rates have climbed, it is still a great time and historically those rates are still very low. We also believe that rates will continue to trend up over the course of the next year or two due to the risk of inflation. The signs are already there with the price of crude oil, gold, copper and all the commodities up dramatically in the last couple of months combined with the weakness of the dollar. With all the money Uncle Sam has printed, inflation is really the only outcome that can happen.
In any event, I digress. What is this affordability index that I am talking about? It has been around for 40 years believe it or not but it is just not mentioned a lot. According to Buck Wargo "The index is a measure of housing affordability over time by examining home prices, mortgage interest rates and family income. The National Association of Realtors (NAR) index dates back to 1970." According to the stats, a record was set in February of this year when the index hit 174.4. Thus, housing affordability has hit a level that has not been seen in over 40 years since NAR has tracked it !!
I think that this index will start to get more national attention. In the past, this data has been used more so by government analysts than by Realtors and consumers. With information like this available, I would think that Realtors will start to discuss it more with their clients and consumers will be inquiring about it more so as well.
More info can be seen at NAR's website at NAR's Affordability Index .
Also, the index is broken down by year, month and region - see NAR - Housing Affordability Index .
So if you have not bought a house yet this year, what are you waiting for ?
Fast forward 3 to 5 years, I think we will be seeing higher real estate prices as well as higher mortgage rates.
What do you think ? Please share your thoughts with a comment regarding the Housing Affordability Index or the opportunity (or lack of if you believe) in the housing market in general. Also, if you have not subscribed yet to our blog, what are you waiting for ? Is just a click away !
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Thanks for this good post on such important subject of home affordability. Agree that this is "probably the best time to purchase a property in your lifetime, especially if you are a first time homebuyer." Interest rates remain low relative to history and inspire more people to get involved with their homebuying.
Challenge now for qualified buyers here in Orange County, CA, for homes under $500k, is there are lots of of others looking and bidding on the same nice properties. When you figure out that it is a good time to buy, you will not be along here in Southern California.
Harrison- Yes, I like the phrase "probably the best time to purchase a property in your lifetime" and believe it too, especially for the first time homebuyer for sure. Your point is a good one though that the competition is starting to heat up. We are seeing it in Philadelphia as well where the property priced homes are getting a lot of traffic and multiple offers.
It is important now more than ever for buyers to be working with top buyers agents that can help them procure those desired properties that are in demand !
Chris and Stephanie ~ This is great information about the housing affordability index for 2009. It is a great time to buy right now! Thank you for letting us re-blog your article. I am going to do it right now and hope some of the home buyers in my area will have a chance to read it and possibly jump on the chance to buy a home!
Christopher and Stephanie:
It is unbelieveable that people can get into the market. When I bought my first house I was 21 with a 9% 25 year mortgage. Over time and cycles the market rises, when it come down like this with low rates, people must take advantage of it.
Richard
Terrie- You are welcome ! I am surprised that this index (Housing Affordability) is not talked about or discussed more often. But I think it will. Consumers and clients would love to know this information. It is pretty powerful knowing that this index is at a 40 year high ! Which is why I say it may be the "best opportunity in one's lifetime" !
Richard - You go that right ! In our area, with rates increasing, it has caused a blip of activity as I think it is forcing buyers to get off the fence with the fear that rates could continue to rise !
No surprise there. Those who buy now will be rewarded in the long term!
Bill - You got that right ! In Philadelphia, they will definitely be rewarded, especially first time homebuyers ! For those that are "on the fence" I would suggest to get off the fence ! Otherwise folks will be saying down the road "I should have bought when..." ! (fill in the blank, when rates were in the high 4s...)
Hey guys,
I agree completely.
What a great way to get the "word" out that NOW IS THE TIME.
Even with the rates creeping up last week I called all my clients that were "sitting on the fence" and told them TO GET MOVING!
Shelia - Yes !! "NOW IS THE TIME" !! : ) . Best index in 40 years... what more confirmation or validation does someone need ?