The Latest Housing Affordability Index Data – September 2014

 

  By Bob Angilella

 

It seems that the affordability index is finally down from all time highs.   Big Bear real estate is one of the area’s that is benefiting from this downward trend, as our values are about 35% down from all time highs.   That, with interest rates being low, makes it a great time to invest in a Big Bear vacation  home, Big Bear investment cabin, Big Bear lakefront or 1031 Tax Exchange.    Please read below, as this article is compliments of the California Association of Realtor’s.

The Latest Housing Affordability Index Data  by Michael Hyman, Research Assistant on September 16, 2014

At the national level, housing affordability is down for the month of July and from a year ago, due to home prices that continue to rise faster than incomes. Despite those factors, slower-paced price growth and the second lowest mortgage rates of the year are good for a change in affordability.

  • Housing affordability is down for the month of July, as the median price for a single family home in the US may have met its seasonal peak.
  • The median single-family home price is $223,900, up 5.1 % from July 2013 as year-over-year price gains are currently slowing down. Mortgage rates are up 12 basis points (one percentage point equals 100 basis points) from last year. Nationally, affordability is down from 160.7 in July 2013 to 153.8 in July 2014.
  • Affordability is down slightly from one month ago in all regions except the Midwest. The Midwest was the only region to experience a slight gain in affordability due to lower home prices and qualifying incomes. From one year ago, affordability is down in all regions. The West saw the biggest decline in affordability at 4.6 %, with the other regions are not far behind.
  • The rise in mortgage rates was modest this month, so purchases at this time are still favorable when you compare the locked-in monthly payment of a mortgage to the rise in rents. New home construction and an increase in inventory during a time of low rates could lead to more manageable price growth and more sales.
  • The FHA has agreed to eliminate the pre-payment penalties, a positive change for borrowers that pay off their mortgage, starting in 2015.
  • The Housing Affordability Index calculation assumes a 20 percent down payment and a 25 percent qualifying ratio (principle and interest payment to income).  See further details on the methodology and assumptions behind the calculation here.

 

 

 

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