It’s All About “Affordability”…!
I want to pass on the numbers of the recent report provided by the California Association of Realtors regarding the 2nd quarter “affordability index”.
Click Here for the 1st Time Buyer’s Affordability index data and you’ll see we have a healthy market and that should be around for a while yet. The reason I’m confident of about the future market is the history of this index to the market.
When I moved to Folsom from Santa Clara County (Silicon Valley) back in October of 1989, the Affordabilty Index was a lot different. If you look below here you’ll see the Traditional Affordability Index back then. This index is based upon a buyer with a 20% down payment for the “median priced” home.
Area/Region 1989
California 23%
Sacramento 40%
Santa Clara 19%
As you can see above, when I moved to Folsom 40% of the folks living here at the time could afford to buy the median priced home, compared to only 19% in Santa Clara County. The point of all this…? There was a bust in Real Estate shortly after in late 1990 and 1991 that lasted a couple of years. The same thing occurred in late 2005 and early 2006 when we saw the Affordability Index drop big time because of price appreciation.
Today, you’ll note, from the 1st time buyer’s index above, affordability is really not a problem right now is it…? Therefore, you’d think with all things being equal, we’ll have a decent real estate market for a while before we have some kind of correction.
Things could change of course, interest rates going up or other economic factors out of our control, but overall…? I think we’re in for a couple of good years.
In the mean time…?
Make it a Great Day…!
Ed Favinger, Broker CRS, GRI, SFR, CDPE 916-203-1260 favinger@rwnetwork.com
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- California Housing Affordability Index Falls In Second Quarter (smmirror.com)
- Home sales rise as prices fall in third quarter (lexingtonlaw.com)
- Housing affordability is high, but qualifying for a mortgage still tough (agbeat.com)
- Real estate market is healthy overall, say industry trackers (SacBusJournal)
- In This Market Should Your Rent or Buy (RE Insider)