The Housing Affordability Index jumped to 220 this month, the highest level since tracking started in 2001 and more than 80% above its low point in mid 2006. That means that the median family income is 220% of the income needed to qualify for the median priced home using a 20% down, 30-year fixed mortgage.
Increasing inventory, continuing low prices and record-breaking mortgage interest rates combine to keep us in the midst of the 'housing sale of the century', a unique opportunity for buyers who are in a position to make the move into home ownership.
It comes as no surprise that home sales continue to be sluggish. What I find so interesting in looking at the chart below comparing sales for the last four years is the spaghetti-like lines jumping all over the place for the last half of the year. January-June patterns at least follow similar upward curves. But then, instead of following a 'normal' downward curve for the last half of the year they go all over the place… reflecting influence by outside forces, including federal homebuyer tax credits and financing changes.
New listings are holding fairly steady after their dramatic shifts earlier in the year reflecting the end of the homebuyer tax credit.
The net result of the drop in sales coupled with steady new listings is an increased supply of homes available for sale…
…with the increase most pronounced in the lower price ranges. Sales have dropped dramatically in the lowest price range, and months supply of inventory has more than doubled since this time last year when there was only a 2.9 month supply of inventory available in the under $120K price range.
Months supply of inventory has increased for all property types, but for houses it is now closer to what it was in 2008 than last year.
Median prices continue to inch down, not unusual for this time of year even in a more 'normal' market.
So, what does all this mean? Combined with the lowest mortgage interest rates in decades, housing market conditions indicate that it continues to be a great time to be a buyer!
The figures above are based on statistics for the combined 13-county Twin Cities metropolitan area released by the Minneapolis Area Association of Realtors. Click here for links to local reports for 125 metro area communities.
Sharlene Hensrud, RE/MAX Results - Email – Minneapolis – St. Paul Real Estate Market Information
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