Tuesday, September 10, 2013

Purchasing a home is a fantastic investment for your future. For many, it is an extremely important goal of their lives. Overall, the main concern of potential buyers is to invest in the perfect home for them without having to sacrifice all of their savings and earnings. 

The National Association of Realtors released the latest housing affordability data on Monday. 

The affordability index measures the household income needed to qualify for a traditional mortgage on a median-priced single family home. So it's looking at a mortgage with a 20 percent down payment and a monthly payment below 25 percent of income at the currently effective rate on conventional mortgages.

Because the index is above a score of 100, this indicates that the "median income is higher than needed to qualify for a mortgage" (Carney, CNBC). We are at the lowest level of affordability since July 2009 because of the rising interest rates and home prices, while wages increased at a much slower pace.

According to the NAR, this shouldn't be dire news. A score of 157.8 officially indicates that a household earning the median income has 57.8 percent more income than needed to get a mortgage on a median priced home.

What are your thoughts on this topic?