Home Affordability Peaked Last Quarter; Purchasing Power Sinks 10%

Filed under home values by on March 8, 2011 at 7:47 am {no comments}

Home Opportunity Index 2004-2010

reached an all-time high in 2010′s last quarter. Unfortunately for home buyers , it’s been a different story since, however.

As mortgage rates cratered, and with soft, the reached its highest level in 20 years. The index is published by the National Association of Home Builders. 

Close to 74 percent of the new and existing homes sold between October-December 2010 were affordable to families earning the national median income of $64,400. It’s the 8th straight quarter in which the Home Affordability Index surpassed 70 percent.

Prior to 2009, the HOI rarely topped 65 percent.

That said, though, as with everything in real estate, home affordability is a local event. For example, take the Elkhart/Goshen area of northern Indiana. 97 percent of homes sold there last quarter were affordable to families making the area’s median income. 

This level of affordability is likely related to state capital Indianapolis, a perennial top-scorer itself.

For the second straight quarter — and the 22nd time dating back to 2006 — Indianapolis led all major metropolitan areas with a 93.5 affordability rating.

Meanwhile, on the opposite end of the home affordability spectrum, the “Least Affordable Major City” title went to the New York-White Plains, NY-Wayne, NJ area for the 11th consecutive quarter. Just 25.5 percent of homes were affordable to households earning the area median income.

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Home Affordability Reaches Record-Levels… Last Quarter.

Filed under home values by on December 9, 2010 at 7:47 am {no comments}

Home Affordability - Top and Bottom 5 markets 2010 Q3

Last quarter, with home prices still relatively low and mortgage rates making new, all-time lows almost weekly, the cost of home ownership was extraordinarily low in Illinois and most U.S. markets.

According to the National Association of Home Builders’ quarterly Home Opportunity Index, 72.5 percent of all new and existing homes sold between June-September 2010 were affordable to families earning the national median income. This ties the all-time high for , set in the first quarter of 2009.

The data also underscores that, when compared to historical norms, it’s a fantastic time to be a Oak Park home buyer.

Prior to 2009, the rarely topped 65. The index has remained above 70 ever since.

All , though, and on a city-by-city basis, home affordability varied last quarter.

For example, 96% of homes sold in Kokomo, IN are affordable for families earning the area’s median income. This handily beat the average figure and led the nation. Looking at major cities, Indianapolis led the pack.

93% of homes in Indianapolis are affordable to families earning the area’s median income. This ranks #9 nationwide.

On the opposite end of the affordability scale is the New York-White Plains, NY-Wayne, NJ region. For the 10th consecutive quarter, the New York Metro region ranks last in U.S. home affordability. Just 23% of homes are affordable to families earning the local median income, although this is 3 points higher versus Q1 2010.

The rankings for all 225 metro areas are available online.

Regardless of where your hometown ranks relative to its neighbors, home affordability remains high as compared to historical values. That said, with mortgage rates rising and home sales expected to climb this winter, it’s unlikely that the Home Opportunity Index will improve.

Buying a home may never be this inexpensive again. If you planned to buy in mid-2011, consider moving up your time frame.

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Which Model Is More Accurate : The Case-Shiller Index Or The Home Price Index?

Filed under home values by on September 9, 2010 at 7:46 am {no comments}

Home Price Index from April 2007 peak

The private-sector Case-Shiller Index reported home values up 5 percent nationwide in June. The government’s own Home Price Index, however, reached a different conclusion.

According to the Federal Home Finance Agency, month-to-month fell 0.3 percent in June, and values are down by 1.7 percent from June 2009.

So, as a home buyer and/or homeowner in Oak Park , by which valuation model should you make your bets?  Perhaps neither. 

This is because both the Case-Shiller Index and the Home Price have inherent methodology flaws, the most glaring of which is their respective sample sets. 

The Case-Shiller sample set, for example, comes from just 20 cities across the country — and they’re not even the 20 most populated cities. Together, the Case-Shiller cities represent just 9 percent of the overall U.S. population. 

That’s hardly representative of the housing stock overall.

By comparison, the Home Price Index tracks home sales everywhere — every city in every state — but it specifically excludes certain properties.  The Home Price Index does not track sales of homes for which the financing comes from agencies other than Fannie Mae or Freddie Mac. This means that as FHA loans grow in popularity, the pool of Home Price Index-eligible homes is reducing. 

The HPI ignores homes backed by “jumbo” loans, too.

Therefore, the “right” model for home values cannot come from national data at all — it can only come locally. Neither Case-Shiller nor the government has the tools to get as granular as a neighborhood like Bucktown. A real estate agent in the area does, however.

The best way to get a pulse for what’s happening in markets right now is to talk to somebody with good data.

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Home Affordability Rankings For 225 Metropolitan Statistical Areas

Filed under home values by on August 27, 2010 at 7:46 am {no comments}

Home Affordability - Top and Bottom 5 markets 2010 Q2

With home prices holding firm and mortgage rates still dropping, is reaching new heights.

According to the quarterly Home Opportunity Index as published by the National Association of Home Builders, more than 72 percent of all new and existing homes sold between April-June 2010 were affordable to families earning the national median income.

It’s a slightly higher reading as compared to last quarter, and the second highest reading in the survey’s history.

As with all aspects of real estate, however, home affordability varies by locale. 

For example, 97.2% of homes sold in Syracuse were affordable for families making the area’s median income, earning the New York city its first “Most Affordable Major City” designation.  Indianapolis was the first quarter winner.

On the opposite end of the spectrum, the “Least Affordable Major City” title went to the New York-White Plains, NY-Wayne, NJ area for the 9th consecutive quarter.  Just 19.9% of homes are affordable to families earning the local median income, down 1 percent from last quarter.

The rankings for all 225 metro areas are viewable on the website but regardless of where you live, buying a home is as affordable as it’s ever been in history. Furthermore, because are in recovery and mortgage rates may rise, the market is ripe for home buyers in Wicker Park.

All things equal, buying a home may never be this inexpensive again. If you were planning to purchase later this year, you may want to move up your time frame.

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CNNMoney.com: Best And Worst Real Estate Markets For 2010

Filed under home values by on March 23, 2010 at 7:47 am {no comments}

recently published its 2010 forecast and projections for home prices in the country’s largest metro markets.

Listed as “Top 25″ and also comprehensively by state, CNNMoney.com’s home puts Santa Rosa, California at the top of 2010′s home appreciation list and Hanford, California at its bottom.

The 10 cities projected for highest home appreciation in 2010 are:

  1. Santa Rosa, CA : +6.0%
  2. Cheyenne, WY : +4.7%
  3. Kennewick, WA : +4.6%
  4. Merced, CA : +4.4%
  5. Bremerton, WA : +4.2%
  6. Fairbanks, AK : +4.2%
  7. Corvallis, OR : +4.1%
  8. Tacoma, WA : +3.9%
  9. Anchorage, AK : +3.8%
  10. Bend, OR : +3.3%

The Pacific Northwest is the region most heavily-represented among price gainers. The Southeast and Middle Atlantic are most represented on the under-perform list.

However, just because a city’s homes are expected to appreciate (or depreciate) in 2010, that doesn’t mean that every home within its limits will follow suit.  Real estate cannot be grouped on a city level like CNNMoney.com tries to. There will always be areas in demand within city limits in which prices rise, just as there will be out-of-demand areas in which prices fall.

Real estate data can’t be grouped by city or even by ZIP code, really.  It’s more local than a city, more local than a ZIP code, and certainly more local than an MLS area.

When we say “”,  it means that every street in every town has a distinct set of traits that drives its . Homes that are one block closer to the train; or, homes that are facing north; or, homes that are made of brick. Each of these characteristics can affect a home’s desirability which, in turn, can affects its sales price.

National surveys can’t capture “essence” like this. They only report on the aggregate.

For local real estate data, look to established, publicly available websites and to active, local real estate agents.  Both will have data and insight that can help you.  National surveys often make for good headlines, but do little to help homebuyers find good value.

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