Affordable Homes at 20-Year High
When I first became interested in real estate, rates were right around 7 percent(ish). And every time rates appeared to be creeping up, my Dad would holler, "Back in the day, rates were 14 percent -- and people still bought houses right and left! People have to have a place to live, no matter what rates are like."
While that's true, "back in the day," homes routinely went for $40,000 or $75,000. These days, the median home price is around $177,000 and in my neck of the woods, the median is upward of $600,000. Seven percent of that is a vastly higher, and more prohibitive to homeownership, than 14 percent of $40K.
Last quarter, though, interest rates dipped below -- gasp 5 percent! As rates dropped to their lowest levels, ever, and prices were also at or near bottom in the minds of most industry insiders, the affordability of owning a home in America crept to near-historic highs for the seventh quarter in a row, according to the Housing Opportunity Index (HOI), released yesterday by the National Association of Home Builders (NAHB) and Wells Fargo.
"With interest rates remaining at historically low levels, and house prices starting to stabilize, homeownership is within reach of more households than it has been for almost 20 years," said NAHB Chairman Bob Jones, a homebuilder from Bloomfield Hills, Mich.
The HOI, which takes into account each city's home prices and interest rates, hit a record high of 72.5 percent of American homes being affordable to someone earning the national median income in the first quarter of 2009. The most recent HOI indicates that 72.1 percent of homes were affordable to households at the national median income of $64,400, but this is the seventh consecutive quarter in which the HOI was greater than 70 percent. And that's saying something, considering that the HOI seldom reached 65 percent, and never hit 70 percent!
To read the full story, visit WalletPop.
These AOL Real Estateguides can help, no matter whether you choose to buy or sell:
- First-Time Homebuyer's Guide
- How to Shop for Your First Home
- How to Price a Home to Sell Fast
- How to Get a Low Mortgage Rate
More on AOL Real Estate:
Find out how to calculate mortgage payments.
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Find foreclosures in your area.
Get property tax help from our experts.