How Scary is the Housing Affordability Index?

How Scary is the Housing Affordability Index? | Simplifying The Market

Some industry pundits are saying that the housing market may be heading for a slowdown. One of the data points they use is the falling numbers of the

But, wait a minute…

Though the index has decreased over the last four years, we must realize that at that time there was an overabundance of housing inventory and as many as one out of three listings was a distressed property (foreclosure or short sale). All prices dropped dramatically and distressed properties sold at major discounts. Then, mortgage rates fell like a rock.

The market is recovering and values are coming back nicely. That has caused the index to fall.

However, let’s remove the crisis years and look at the current index as compared to the index from 1990 – 2008. We can see that, even though prices have increased, historically low mortgage rates have put the index in a better position than every year for the nineteen years prior to the crash.

How Scary is the Housing Affordability Index? | Simplifying The Market

Bottom Line

The Housing Affordability Index is in great shape and should not be seen as a challenge to …read more

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