by Lawrence Yun, NAR Chief Economist
Amid all the media reports on how housing is still “in the tank,” one piece of news seemed to have escaped many of the pundits. Housing affordability could possibly reach an all-time high of near 200 in the second half of this year. That is, a household making the median income would have twice the income necessary to buy a median-priced home in America. To date, NAR’s housing affordability index reached 
an all-time high of 184 back in early 2009. It was only slightly above 100 during the housing bubble years, meaning that qualifying income barely met the requirements to buy a home even with a 20 percent down payment (if not using teaser-rate, funny/toxic mortgages). Historically over the past 40 years, the average affordability index was 118.
The principal reason for the expected record high housing affordability index reading is the rock bottom mortgage rates of 4.4 percent on a 30-year fixed rate. Add to that modest gains in the average wage rate, which rose 3 percent in 2009 and is up 1.2 percent this year-to-date in spite of the high unemployment rate. Consider now versus then when home prices were at their “bubble” peak in 2006.
Read the full article: http://www.realtor.org/research/reinsights/economistcommentary
