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    The ‘REAL’ News about Housing Affordability

    The 'REAL' News about Housing Affordability | MyKCM

    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:

    The 'REAL' News about Housing Affordability | MyKCM

    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.

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    Carin Nguyen

    Carin Nguyen takes the business of real estate very seriously and she has the track record to prove it. She holds the recent prestigious title and ranking of the #1 realtor in AZ for sides as awarded by the Wall Street Journal. Carin is an Arizona native and fully understands the complexities and changing landscape of the Arizona market. She has been in the real estate industry for over 10 year’s full time and comes by her expertise honestly, having honed it during years in the finance and mortgage industries. Education and knowledge is key in getting her buyers and sellers what they what. A rich resume built with a tireless commitment to her clients, undeniable proven past success and an uncompromised vision for the future create the recipe for complete customer satisfaction. Carin understands the potential emotional stress and sometimes life altering experiences felt by clients during the real estate transaction process. Carin is unyielding in insisting on complete professionalism from herself and her team while understanding that real estate is a personal business. She thrives on managing the details and individuality of each transaction and client. Her clients know that having Carin on their side means they have an advocate who cares about them and their needs. Carin is convinced that building relationships will ensure continued satisfaction and be reflected in future success. There is no denying what provides Carin with her constant strength. Her family is “at the heart of my motivation to push myself to achieve my goals and to be forthright in all that I do. My husband, Son, is my biggest source of support, my coach and my best friend. I am truly blessed with a loving husband and four great children who collectively strengthen my resolve to be the best at all my endeavors. I can be a wife and mother and still be a successful Realtor because I tackle everything with all that I have. My motto is ‘Working Hard To Get Homes Sold’ for a reason. I am thrilled that so many families have made me their real estate consultant.” A commitment to professionalism, an empathetic and understanding approach to her clients and an unstoppable and dependable force from her family all ensures success for Carin and most importantly, her clients

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