Affordability Index Going Up

The National Association of Homebuilders index of purchasing ability recently hit the highest level in its 18 year history. The NAHA/Wells Fargo housing opportunity index showed that 73% of homes sold in the first quarter of this year were affordable to families earning the national median income of $64,000. In Los Angeles County, 42% of the homes sold in the first quarter were affordable to a median-income family, up from a recent low of 2% in the first quarter of 2006.

The forecasting firm HIS Global Insight reported recently that Los Angeles County home prices are undervalued by 6%, with its calculations based on home prices, interest rates, area incomes, population density, and historic premiums and discounts in given markets.

All of these indicators, combined with the fact that interest rates appear to have started to move higher from recent historical lows, federal and state tax credits will be expiring soon, and sellers are still making very aggressive deals in the market, make this an excellent time to purchase a new home.

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