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Seizing opportunities in undervalued markets

Prices may be right, but is purchase smart?
Published on Jan 13, 2009

Recent data out from the National Association of Realtors (NAR) shows that its home affordability index (HAI) is at the best levels in more than three decades. The HAI compares median family incomes to median home prices on a national basis. A value of 100 signifies that a family earning the median income has enough income to qualify for a mortgage on a median-priced home. (The monthly mortgage payment is conservatively figured to not exceed 25 percent of the median monthly family income). The current HAI value of 141.8 means that a family earning the median family income has 141.8 percent of the income necessary to qualify for a conventional loan covering 80 percent of a median-priced existing single-family home. This represents a substantial improvement in home affordability from the level of 119.4 just one year earlier. The current reading of 141.8 is the best since the early 1970s and the best ever since the NAR began determining this ratio monthly in 1981. HAI data f...

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