New Affordability Index for FHFA

Achieving the American Dream of home ownership is getting farther out of reach for certain segments of our population, a recent report from the Federal Housing Finance Agency finds. This preliminary paper builds upon the National Association of Realtors’ Housing Affordability Index by categorizing affordability based on income levels.

This study goes beyond overall affordability data with the intention to make a connection between income and the number of existing properties that people in each income level could afford.

The Increasing Divide

Although housing affordability has been increasing over the last 12 years in general, families in very low-income households can only afford 39% of the nation’s housing stock. The news is slightly better for low-income buyers who can afford just over half of the stock at 55%. Meanwhile, median-income families can afford to buy 62% of the housing stock.
For many of us, this doesn’t come as a surprise, but the report appears to be one of the first to show statistics that back up anecdotal observations of today’s homebuyers. The report’s authors don’t provide data offering causality, but this is definitely something real estate and mortgage professionals should keep an eye on.

When Life Gives You Lemons…

Although we can’t control available inventory, we can work together to make housing more affordable for homebuyers in our own communities. Part of this comes down to delivering mortgage solutions that fit each borrower’s income. With more than 142 low down payment options, Stearns helps facilitate home ownership for those who may not otherwise think they can buy a home.
With last week’s 2.9% increase in weekly mortgage applications, the ability to buy a home hasn’t completely stalled, even with mortgage rates that are inching up.

- By Stephanie Clark , Sep 25, 2018