We have come so far with the stock market. This week, the NASDAQ hits 3000, but what about homeowners? The NAR Home Affordability Index may finally have some good news. And as usual, providing personal finance advice, real estate advice and consumer advice on the Ilyce Glink Show March 18, 2012 on WSB Radio.
This week, the NASDAQ hits 3000, which it hasn’t done since 2000. I am amazed by how far we’ve come in the stock market. But the housing market? Not so much.
BUT there might finally be some good news for homeowners and those who hope to secure a mortgage loan in the near future. We might finally be seeing the bottom in the collapse of the housing market.
The NAR Home Affordability Index was just released. The National Association of Retailers reports an index of 206. What does this mean? Basically homes are now twice as affordable as they were during the peak of the housing bubble. As a point of reference, just a few years ago, the index registered at 106.
The numbers demonstrate that not so long ago, you needed three to four times your annual income in order to purchase a home. Now you only need twice the income. What’s driving the change?
- Mortgage rates are at 50-year lows.
- Housing prices have fallen more than 40 percent nationwide.
How does that second bullet point represent good news? Well in a number of key pockets around the country (Chicago, Los Angeles, Boston, San Francisco), home value declines have slowed, or in some cases, stopped altogether.
All this means, as I said, we may finally be reaching bottom.
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