Our broker passed along an interesting article today. In it Ms. Cho explains that the Housing Affordability Index is at an all-time high - and high is good in this case. It reinforces what I've been telling people all year, "anybody that buys in 2013 will consider themselves a genius in the near future." The prices combined with mortgage rates have created great opportunities to buy real estate. In fact, the buyers in town now are saying, "it's a safe time to buy all you can." If the past is any indication of the future, Marco Island real estate prices are too cheap and appreciation is assured. The only question is how much?
I've got the rest of the article below. Feel free to comment. I'd love to hear what you guys are thinking about the market.
NAR: Housing Affordability to Reach New High in 2012
By: Esther Cho 01/09/2013
The year 2012 is on its way to becoming the most affordable year housing has seen since recordkeeping began in 1970, according to data from the National Association of Realtors (NAR). In November, the NAR’s Housing Affordability Index reached 198.2, down 2.5 index points from October, but up 1.5 points from a year ago. The index determines affordability based on the relationship between median home price, median family income, and average mortgage interest rate. The index also assumes 25 percent of gross income is devoted to principal and interest and a 20 percent down payment would be made. Based on data up to November, NAR also projects the index will set a record high of 194 in 2012, beating the high of 186 in 2011. However, record affordability doesn’t necessarily translate into more homeowners. “Although 2012 was highest on record, the excessively tight underwriting precluded many would-be homebuyers from locking-in generational low interest rates,” explained Lawrence Yun, NAR chief economist. NAR president Gary Thomas, added, “A more sensible lending environment that makes it easier for other financially qualified buyers to get a mortgage would allow many more households to enter the market, boosting home sales as much as 10 to 15 percent.” While affordability is expected to see a new high in 2012, NAR expects affordability in 2013 to drop to 160. NAR noted an average of 160 means a median-income family would have 160 percent of income necessary to buy a median-priced existing single-family home. “Rising home prices and a gradual uptrend in mortgage interest rates will offset improvements in family income, but 2013 likely will be the third best on record in terms of household buying power,” Yun noted. ©2013 DS News. All Rights Reserved.