Finally, how one might use the Housing Affordability Index data depends upon a variety of factors.

A multifamily investor would perhaps be most interested in investing in markets that have a very poor (or low) Housing Affordability Index – signifying that single family property prices are too high for many families and first time home buyers to afford, therefore driving them to tenancy.

A single family investor who buys and holds homes to lease to long term tenants would share the perspective of a multifamily investor, though a single family investor intending to rehab and sell homes to owner-occupants would desire a market with better affordability (high Housing Affordability Index values).

For someone looking to buy their first home or a move-up home, higher measures of affordability clearly mean more house for the dollar, and most likely greater ease in documenting value for purposes of procuring a mortgage in today’s milieu of tightened lending standards.   

It’s our firm belief that given the current single family housing environment, affordability will be a key metric to follow as individual markets begin to bottom and recover; single family market recovery will likely not happen without restoration of rational affordability.

Some markets have a long way to go to restore rational affordability parameters.   

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