The Housing Affordability Index is a metric used to
gauge the affordability of housing. It considers a variety of factors including
interest rates, home prices and family income to compute a percentage that
compares the median* family income to the amount of income necessary to qualify
for a mortgage on a median* priced home. 100 is the "break even" point
and a higher number means greater affordability.
(* - What is the difference between "median" and "average"?
Click here for an explanation.)
A Housing Affordability Index of 100 would mean that a family earning the median
income has exactly enough income to qualify for a mortgage on a median priced
home. An index of 150 means they have 150% of the income necessary, and an
index of 200 means they have twice the income necessary. Conversely, an index
of 50 would mean they only have half the income necessary, indicating an area
with expensive housing, a low median income, or both.
This affordability index can be computed nationwide, on a state by state basis,
or even city by city. The National Association of Realtors® keeps tabs on
the Housing Affordability Index for each market, and every month, I look forward
to receiving the New York State Association of Realtors® report showing the
current market conditions in Chautauqua County, including the affordability
index. Something that struck me as I looked over the data this month is just
how affordable our homes are here in Chautauqua County.
As of the time of this writing in November 2015, the year-to-date nationwide
index is approximately 165 while Chautauqua County's year-to-date index is 430.
Nationwide, a family earning the median
income has approximately 165% of the income necessary to qualify for a
mortgage on a median price home, however a family earning the median income here
in Chautauqua County has 430% - that's over four times the
necessary amount, and it means that homes in our local market are more than two and a half times more affordable than the average American home.
If you are renting and thinking about building equity in a home,
considering a move to this area, or are simply looking for a change, the
affordability of housing is just one more reason why Chautauqua County is an
to purchase and own a home! Our market is currently blessed with a large inventory of
homes for sale, giving you plenty of variety and making this an excellent
time to buy.
Jon Steiger is a New York State Licensed Real Estate Broker and co-owner of Steiger Realty in Forestville, NY. For contact information and more articles like this one, please visit his real estate web page.