The current national housing affordability index is 206.1.  To put this in perspective, an index of 100 means that a median-income household as exactly the income required for qualification of a mortgage for a median-priced single-family home (assuming a 20% down payment and a ration of 25% of the household income being used for mortgage payments).  So index of 200 means that a household has double the income required to purchase the same home used in the example above.

The index is obviously dependent on median home prices and the average mortgage rate.  Reduced home prices and continued low mortgage rates have helped to boost the index to its current record high level.

What’s the bottom line?  The current affordability index means that home ownership is available to more people than ever before.

The index is strongest in the Midwest (a whopping 263.9!), followed by the South (209), the West (170.2), and the Northeast (167.1).

And because the index is affected by home prices and interest rates, the affordability index (and buyer opportunities) can change quickly.  Having said that, the National Association of Realtors® is predicting that the index will likely remain high throughout the rest of 2012.

The next index update is due out May 9th – so watch for that to see what kind of changes have occurred during this quarter.

LACK OF HOUSING INVENTORY

Boy, have things changed in recent months in many parts of the country!  I’m hearing from my clients across the country that they are seeing a market which is definitely heating up.  They report in many price points they are seeing the return of multiple offers. 

MSN did a great feature on these markets, which you can find at http://realestate.msn.com/10-major-housing-markets-with-the-shortest-supply-of-homes#1.

Here are the markets where there is a lack of inventory – and that means great opportunities for sellers in those marketplaces.

Denver, Colorado.  February 2012 inventory was down a huge 42% from February 2011 levels.  Average prices were up 2%.

Portland, Oregon / Vancouver, Washington.  Inventory is down 38% in these two communities.  Downtown Portland condos are in particular demand.  Homes are selling at or near listing prices.

Seattle / Bellevue / Everett, Washington.  The Seattle market experienced decline later than many parts of the country, and it looks like the may be recovering more quickly than most parts.  Inventory is down 36% since February of last year.  Multiple offers are being reported in a number of price points; prices are slowly rising.

San Jose, California.  With inventory down 36%, and the cost to rent higher than the cost to purchase this market has really heated up.

Salt Lake City / Ogden, Utah.  These communities are reporting a drop of 31% in inventory.  Housing is particularly scarce in lower price points.

Sacramento, California.  Sacramento was at the hub of foreclosure activity several years ago.  Now, with inventory down 30%, houses at many price points are selling briskly.

San Francisco, California.  Multiple offers are common in many price points, a reflection of inventory being down 29% over last year.

Birmingham, Alabama.  This community is seeing declining days on market, as a result of a 29% less inventory on hand.

Memphis, Tennessee.   Both high-priced and entry level homes are selling well in Memphis, which is reporting inventory down 29%.

Richmond-Peterburg, Virginia.  Low unemployment, coupled with low inventory, is moving this market.  A reduction of 29% in inventory over last year is adding to the frenzy.  Homes in all price levels are selling; entry-level homes are receiving multiple offers.

Of course, a lack of housing inventory isn’t always so great for buyers.  These are the markets where buyers may face multiple offers, or at the very least, stiff competition for desirable homes.

And while you’re thinking of a second home, more than likely, it may be in the Sun!! I have traveled from Hawaii to California to Mexico to Arizona and Palm Springs researching second home markets and the places where Seattleites like to go. If you are interested in exploring a second home in the sun, I’m your go-to resource!

Here’s how….

Second Home Purchases

For more on this article, click here

Tip of the day……

Home energy credit

First, any homeowner may qualify for an energy credit of up to $500. You can qualify for the credit if you purchase during 2011 solar panels to generate electricity or for water heating, or install wind energy equipment, a geothermal heat pump, or certain types of fuel cells to generate electricity. The credit is up to 30 percent of the amount you spend, up to the $500 limit. This credit is not available for purchases in 2012.

Luxury Home Sales Catalog for September, 2011

Throughout Seattle and Bellevue construction has started on apartment buildings that will add 6,796 new units to the currently tight rental market. Landlords and managers have been gradually increasing rental rates and decreasing vacancy rates and concessions to keep pace with the strong rental market. Permits for apartment construction have jumped by 63% in the last 12 months.

Property Management Grows In Seattle as Home Sales Slow

Many real estate agents have been transitioning into property management as the local rental market continues to strengthen and the real estate market weakens. Agents have experienced that it is much easier to find renters than buyers in the current climate. As written in this recent article on NPR, many would-be sellers are also reluctantly becoming landlords as they wait for the market to offer a greater (or any) return on properties bought at the height of the boom. Just in case you’re thinking about which path you may need to take, I specialize in both Luxury Real Estate and Luxury leasing, so my clients can navigate either road with the expertise needed in this market.

Sources I like for Real Estate News

1.Google News:
Google News is a great way to peruse news articles from all across the web. If you have a Google Account, you can customize Google News to show more real estate articles. You can also earn badges which show how many articles you read in a certain category compared to other readers.

2. Inman:
If you only have time to peruse one news site each day, Inman’s rental news section is one of the best for learning about new technology and developments in our industry.

3. LinkedIn:
You may already be on the site to find business contacts, so why not just click over to the news section and see what’s happening in your industry? LinkedIn finds articles from reputable news sources all over the web and conveniently organizes them in one spot.

4. Local Business Journals:
We love to read the online editions of the Puget Sound Business Journal and Daily Journal of Commerce to find out about new construction in our area.

The Census Bureau reported an annual sales rate of 307,000 new homes last month, up 1.3% from a downwardly revised rate of 303,000 homes in September. Compared to new home sales a year ago, October sales were up 8.9%.

The 307,000 rate fell just short of expectations. Economists had forecast a sales rate of 312,000 new homes, according to consensus estimates from Briefing.com.

While the higher rate in October indicated that consumers are chipping away at the huge inventory of homes on the market, there’s still a long way to go.   This morning on CNBC, the rate of which banks took back homes has increased, so look for more REO’s and foreclosed homes coming to market.

There were about 162,000 new homes on the market by the end of October. That represented a 6.3-month supply at the current rate of sale. The median sale price was $212,300.

Housing in 2012: Things are looking up

Last week, a separate report showed that more house-hunters are also eyeing previously owned homes. Sales of existing homes rose 1.4% in October, slightly more than economists had expected, according to the report.

At the same time, an increasing number of homebuilders are making plans to build houses and breaking ground on new construction, with building permits and housing starts climbing in October, according to a report released earlier this month.

I believe that Seattle will continue to be an economic powerhouse on the West Coastand that we will continue to see people moving here for all that we Seattleites enjoy-Mountains, Water, Outdoor Activities, Intellectual and Cultural Activities and Great food and Wine!