Local home affordability index hits record

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The local Realtor associations came out with their reports for the month. Home prices are low, and so are interest rates, which in combination makes buying a home more affordable than it has been in decades.   

“The October 2010 Housing Affordability Index of 220 was the highest level on record–going back at least several decades,” the report said. “This means that the median family income was 220% of the necessary income to qualify for the median-priced home using a 20 percent down payment and 30-year fixed mortgage.”

Most buyers do not make a 20% down payment. Down payments of 3.5 -5% are more the norm, and there is down payment assistance available for some. 

There are many homes on the market priced at less than 100K that are in great shape and are move-in ready.  

Last year we saw the number of home sales drop; in fact, they hit an eight-year low. There is some optimism that there will be more home sales this year, which is good news for sellers. It hinges on employment. If the local unemployment rate goes down, there will be more home buying activity.

About 40% of the homes on the market are what we call “distressed”; they are in some stage of foreclosure or pre-foreclosure. This number is down from the peak of 43% in 2009, according to the Minneapolis Area Association of Realtors. Many of us believe that locally home prices hit bottom in 2009, but time will tell. The median home price for the entire metro area for 2010 was $169,900, which is up 2.3% from 2009.

For local housing market numbers please see “Local Market Conditions & Home Prices”.