Christian Real Estate Blog

Housing Affordability Hits 14-Year Low

RealEstateJournal | Housing Affordability Hits 14-Year Low: "Soaring house prices and higher mortgage rates have put homeownership out of reach for more people than at any time in more than a decade.

Housing affordability in October sank to its lowest levels since 1991, according to the National Association of Realtors' Affordability Index, a widely followed measure of the average household's ability to buy a home at current interest rates. In some areas, including New York City, Los Angeles, San Diego, San Francisco and Miami, housing affordability has dropped to levels not seen since the early to mid-1980s, according to mortgage giant Fannie Mae.

Affordability has long been a problem for low-income home buyers. But as home prices have marched steadily higher in recent years, many buyers with healthier incomes also are being squeezed. Declining affordability mainly affects whether first-time home buyers will enter the market, but in some markets people who already own a home are finding it tough to trade up.

There are signs that the growing costs of homeownership are also beginning to take a toll on the housing market. 'There's a systematic erosion of affordability,' says David Seiders, chief economist of the National Association of Home Builders. That decline is 'the main reason ... the market is starting to cool.' Mortgage applicats fell to an 11-month low last week, the Mortgage Bankers Association reported yesterday, as applications to purchase homes declined."

posted by Justin Smith @ 12/23/2005 11:20:00 AM