Real Estate Report 3/1/13
Affordability High for Buyers
LAUREN BUNTING ■ Contributing Writer
(March 1, 2013) The Housing Affordability Index in Maryland set a record in 2012 with an index of 91.7 percent at the end of the fourth quarter 2012. This is the second highest HAI in the seven years the Maryland Association of Realtors has calculated this index. The highest HAI was in the first quarter of 2012.
The index means that Maryland’s first-time homebuyers had 91.7 percent of the income they needed to purchase the typical starter home in that period. The HAI is based upon the percentage of income the typical first time homebuyer must have to buy a typical starter home with a 5 percent down payment, based on a 25 percent qualifying debt to income ratio and assuming a 30 year amortization at the effective mortgage rate plus a PMI premium. So, fluctuations in affordability are based on changes in interest rates, varying financing terms and home prices.
“This is the second quarter in a row of improved affordability for first-time homebuyers and we are pleased for those who are seeking to become homeowners,” said MAR President Carlton Boujai. “We are hopeful that with the ongoing market stabilization and increased affordability, homeownership opportunities for Maryland families will continue to increase.”
Housing affordability has been enhanced by historically low interest rates and a drop in starter home prices (from $215,794 to $206,787). The typically monthly mortgage payment, which includes principle and interest, was $937.
— Lauren Bunting is a member of the Coastal Association of Realtors and a licensed REALTOR® with Bunting Realty, Inc. in Berlin.