Affordability Index Tops 100 Mark Twice
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WASHINGTON — Steady improvements in family income, lower interest rates and only modest increases in home prices have kept the U. S. housing affordability index above the 100 mark for two straight months, according to the National Assn. of Realtors.
In December, 1985, the index rose to 100.2, the first time it had been above the 100 mark since 1978. In January, 1986, the index increased another 0.8 point to 101.0. A 101 index means that a family earning the median income has more than enough income to qualify for a mortgage covering 80% of the median-priced existing home.
As recently reported by the NAR, the typical family in January was earning $28,054 a year, enough to qualify for a $62,200 mortgage. But the mortgage on a typical resale home was $67,779, but only required an annual income of $27,779.
Cites Economic Factors
A number of economic factors affect the index, NAR President Clark E. Wallace said. “Steady increases, such as we’ve seen . . . reflect the continuing positive climate for housing.
Homes generally become more affordable as mortgage interest rates decline, family income improves and home prices rise at slower rates.
“Many more American families are finding themselves in a financial position to buy their first homes or move up to a larger home,” he said.
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