What is it? Answer 192

The housing affordability index (HAI) reflects a consumers’ ability to purchase a home. It takes into account:

• home prices (higher prices hurt affordability)

• mortgage rates (higher mortgage rates hurt affordability)

• family income (higher income helps affordability)

The "affordability index measures whether or not a typical family could qualify for a mortgage loan on a typical home:

• A typical home is defined as the national median-priced, existing single-family home as calculated by NAR.

• The typical family is defined as one earning the median family income as reported by the U.S. Bureau of the Census.

• The prevailing mortgage interest rate is the effective rate on loans closed on existing homes from the Federal Housing Finance Board and HSH Associates of Butler, N.J."

So….is now the best time to buy a home? With today's low home prices, many people may be asking that question. There are a number of incentives, such as low rates, that make now a good time to buy. But some consumers may still be wondering if they should wait or if now is the best time to take the plunge.

I have done hours worth of research and I can’t find a time in history dating back to 1970 where the affordability index was above 190 like it is today.

Another way to determine whether the time may be right for you to buy a home is to start looking at the rents in your community. When a full mortgage payment (including principal, interest, taxes and insurance) begins to equal or fall lower than rental rates, the market is typically near the bottom – and that means you'll likely begin to see housing prices begin to stabilize or even head back up. In many parts of the country, we have already seen this occur. The reality is, no one can time the market perfectly and find the exact bottom. But even if you don't, it's okay. Interest rates are near their lowest EVER and home prices are extremely low – which combines to yield the greatest increase to home affordability in years. If you'd like to see if today is the right time for you please feel free to reach out to me any time.

Gerald Maguire
Senior Mortgage Advisor
Province Mortgage Associates, Inc.
NMLS ID# 12309
Office 401-490-4400
Direct Line 508-269-0181