To measure the affordability of home-ownership the NAR uses their Affordability Index. This is the main source of this information in the industry. This index is calculated by dividing the lowest amount of income needed to make the monthly payments on a median U.S. home by the median income of an American household. As an example, a 100 rating means that median income is equal to the minimum monthly payment on the median home. The measure uses an average national mortgage rate and assumes a 25% coverage ratio (P&I only) and an 80% LTV. While this measurement can be distorted by certain factors, it is very useful in understanding trends in the housing market.
Notice this is the highest t has been in history. I can go deeper into the index for anyone that likes. Just drop me a line. I just wanted to share this visually to let everyone know what kind of opportunities are out there right now. We’ve never seen a market like this!
~Greg :: The Roseville Loan Expert