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Here’s a story the press should be covering more: housing affordability is rocketing back towards sustainable levels. Below is a graph from the NAR on housing affordability and you can see as the market tanks homes are becoming more affordable than they have been at any point in the last 4 years. They’re also b-lining for a return to more historically affordable levels such as during the 1990’s.
We’ve seen 7 straight months of improvement and here’s hoping for more. While it sucks as a homeowner to see your value tank hard (trust me I know) it is the only hope for the housing market recovery that everyone is trying to eyeball right now. Only affordable homes that naturally increase demand will stop the free-fall. It doesn’t take rocket science to figure this out but the sooner we can get to that affordability the level the sooner the bottom will begin to firm up.
When we talk about the market plunging here at Blown Mortgage we don’t do it to lament the end of the good times - we do it to celebrate the (hopefully) near return of sane and sustainable growth in the market based on sound economic fundamentals. The press should cover the affordability issue more closely - it’s the one thing I’m really cheering for here and is the silver lining of the carnage currently in the market.
The text in the box says:
February reading of 135.2 was above January’s 131.3. These readings indicate a family with the February median gross income of $59,967 could afford a maximum mortgage balance of $209,711 which is higher than the median house price of $193,900 for February. As this graph shows, the decline in house prices over the last 12 months has improved affordability.
