For those looking to purchase a home, now is the time. Housing affordability conditions are at their highest level since recordkeeping began in 1970, according to the National Association of Realtors’ (NAR) Housing Affordability Index. The index, which is based on the relationship between median home price, median family income and the average mortgage interest rate, rose to a record high of 206.1 in January.
NAR data is available for five metropolitan areas in which Arvest does business – Greater Kansas City, Little Rock, Ark., Oklahoma City, Okla., Tulsa, Okla., and Springfield, Mo. The average index for those areas is 158.98, which is an increase over the cumulative 2009 index of 141.38.
The index measures the affordability of a median-priced, existing single-family home for a median-income-earning family. An index of 100 represents the point where an average family’s income is exactly enough to qualify for such a home, with a 20 percent down payment and mortgage payments at 25 percent of the family’s gross income.
“A higher housing affordability index rate translates to greater purchasing power for households that qualify to buy a home,” said an Arvest spokesperson. “This is the first time that the national index has crossed the two hundred mark, which means that the average family has about double the income needed to purchase a median-priced home.”
While individual markets may have indexes that vary from the national average, it is more affordable to buy a home than rent in 98 of the top 100 housing markets in the nation, with San Francisco and Honolulu the only areas bucking the trend. NAR projects the affordability index for all of 2012 will remain at historical highs, while mortgage interest rates will continue to be low.
“Saying it’s a great time to buy a home is easy when you’re in the real estate business, but this index really puts that assertion in factual terms. What we know today is that home prices have fallen, interest rates are low and employment and wages are improving,” the Arvest spokesperson commented. “When all of those factors are in play at the same time, you have a situation like we’re seeing now. So, if you’ve thought at all about buying a home, don’t wait too long because these conditions won’t last forever,” he concluded.
Do you have a question about buying a home? Comment below or contact an Arvest Mortgage Lender at (800) 232-5524 or (479) 750-6932. You may also visit the Home Loans section on Arvest.com for additional information or to find a mortgage lender.