According to CNNMoney.com, the turnaround in the U.S. housing market over the past 4 years has pushed home prices to near record levels of affordability. The typical American family, who makes the nation’s median income of $64,000 per year, could afford to buy 70.8% of all homes sold in the U.S. during the last 3 months of 2009, according to a quarterly report from the National Association of Home Builders and Wells Fargo.
This statistic is slightly down from the record 72.5% reached during the first quarter of 2009, but up significantly from the 2nd quarter of 2008 when only 55% of homes sold were considered affordable.
The cause of this jump in affordability is most likely a result of sliding home prices and low mortgage rates. A home is deemed to be affordable by NAHB if a family making the metro area’s median income could devote no more than 28% of their take-home pay towards housing costs. It is important to note that there is a huge variation in affordability aound the nation. Typically, Midwestern cities far outperformed homes on the East and West coasts.
The good news here is that many younger consumers were scared of never being able to purchase a home towards the middle of the end of the housing boom we experienced from 2000 to 2006. Now, that is no longer the case. This is evident in current sales statistics, where many first time home buyers are making purchases.