Some Good News from the Real Estate Slump: Homes More Affordable
February 23rd, 2009 categories: Chicago Schools, Economic Recovery, For Buyers, Housing Market
Did homes get too expensive too quickly during the housing boom? Many economists have argued that they did, and that a fall-off in housing prices was inevitable.
That fall-off has happened. And perhaps there’s some good news in this: Homes are now more affordable to more U.S. residents than they’ve been in years.
The National Association of Home Builders last week released its housing affordability index. The index showed that in the fourth quarter of 2008, 62.4 percent of all new and existing homes sold in the fourth quarter of 2008 were affordable to families that were earning the national median income of $61,500.
That’s a big increase from just one year earlier. In the fourth quarter of 2007, just 46.6 percent of homes sold were affordable to families earning the nation’s median income.
In the Chicago region, which the home builders association defines as the Chicago-Naperville-Joliet area, 56.8 percent of homes were affordable to families earning the median income.
This growing rate of affordability isn’t a surprise to anyone working in the real estate industry or trying to sell a home. Just look at the city of Chicago: The median price of homes in the city during the fourth quarter of 2008 came in at $242,900, according to the Illinois Association of REALTORS®. That’s a dip of 15.8 percent from the $288,375 median price in the fourth quarter of 2007.
Nationally, homes are becoming more affordable, too. This is actually a trend that started in the summer of 2006. In July of that year, the median price of existing homes stood at $230,200, according to the National Association of REALTORS®. In December of last year, that median price stood at a far more affordable $175,400.
There are many ways to look at this. But if you’re a buyer, this is good news. You can now afford more home – even in top neighborhoods in Chicago – for fewer dollars. It’s a great time to buy, and the Housing Affordability Index is just more evidence of this fact.
