Housing Affordability Index?

Housing what? The pros are constantly tossing around economic acronyms and statistics that can be really confusing---- what does it all mean?  Today I'll address the "Housing Affordability Index."  This is actually a relatively simple tool that allows us to determine exactly how affordable the median home is for someone with a median income. The baseline for the index is 100.  When the index is 100, it means that a household with the current median income will have enough money to make mortgage payments on the median cost of a home.*

As the HAI goes up, it means that the median household can more-than-afford the median house payment.

Data is compiled monthly, and the current HAI in the Twin Cities is 241, according to the Minneapolis Area Association of Realtors. This means a household earning the median family income has 241% of the income necessary to qualify for a conventional loan covering 80 percent of a median-priced existing single-family home.  Not a bad time to be a home-buyer!!

*Note that the HAI assumes that the buyer will be putting down 20% of the home's value in cash, thus the mortgage payment will be based on 80% of the purchase price.  It also assumes the the mortgage payment (including principal & interest) will not exceed 25% of the household's total income.