Tuesday, February 26, 2013
Housing Affordability Increases - Is it time to buy a home?
The National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) was released recently. This index "is measure of the percentage of homes sold in a given area that are affordable to families earning the area’s median income during a specific quarter." Specifically, the index shows that "74.9 percent of homes sold between the beginning of October and end of December were affordable to families earning the U.S. median income of $65,000." This number is up from 74.1% in the third quarter of last year.
You can read more about the HOI here: housing affordability index
While our area (Los Angeles) remains at the bottom of the ratings, home buyers in many other areas are seeing a real home buying opportunity - if they can survive the process. Home buyers in many areas are reporting frustration as low inventory combined with an increased number of home buyers is creating a challenge for home buyers. Home buyers are finding that their dream home has multiple offers and may sell for a premium (including a sales price over the listing price). Home buyers are finding that the current listing is most likely selling for more than the last comparable sale. From the suburbs of Washington, DC to the suburbs of Los Angeles, we are hearing the same reports from frustrated and weary home buyers.
What remains to be seen is how the appraisers will deal with this price increase in their appraisal report. Will the appraiser give "upward" value to the pending sale whose price exceeds the last sold comparable property? In recent years, we have seen appraisers "ding" the appraised value of a property with the comment that the area is experiencing a downward price trend. Will the appraisers now give the appraised value a "plus"?
Hang in there home buyers! Patience and fortitude - you'll get the home of your dreams. Now may be a "window" of opportunity for those who have been waiting and wanting to buy a home.