Today we thought we'd point out an interesting new monthly housing affordability model that has just been launched by the National Association of REALTORS® and realtor.com.
The model is split into two parts. The REALTORS® Affordability Distribution Curve provides both national and state-level information on how many houses are affordable to households ranked by income.
The REALTORS® Affordability Distribution Score, on the other hand, measures the affordability for all different incomes in a single measure. It differs from the existing Housing Affordability Index (HAI), in that it doesn't just consider median income levels and only looks at affordability of active inventory or homes currently available for sale, as opposed to those that have already been sold.
You can click here to go to the National Association of REALTORS® website to see the two interactive charts.
We couldn't resist looking at the current situation in New Mexico.
Looking first at the REALTORS® Affordability Distribution Curve, we observed that, by looking at the $50,000-$74,999 category in the curve, which would include the last published US average median income of $55,775, 69% of households can currently afford 72% of the existing inventory in the state.
Then referring to the REALTORS® Affordability Distribution Score, we noted that New Mexico currently has a score of 0.90. That actually compares very favorably with all neighboring states, if we discount the relatively small area of border with Oklahoma, which boasts a better score of 1.09.
However, compare our score of 0.90 with 0.77 in Arizona and 0.72 in Colorado. Using the category that accounts for the national average median income, in Arizona just 66% of households can afford 58% of existing inventory, while the corresponding figures for CO are much worse at 58% of households and just 38% of inventory. Texas gets a score of 0.82 and figures in the $50,000-$74,999 income range of 62% of households and 53% of inventory.
Both interactive charts enable you to make historic comparisons over the past year and it's very interesting to note that NM hasn't had as good an affordability score since January and February last year, when it also posted 0.90.
This is encouraging news for both sellers and buyers, in the sense that affordability here is very competitive with virtually all surrounding states and demonstrates that more buyers are able to afford your home right now if you decide to sell. Bearing in mind that inventory levels are at multi-year lows, it's another great reason to consider listing.
If you're a buyer, here's a great signal that right now is a good time to look for a home when you have a comparatively favorable affordability situation.
Why not bookmark the charts for future reference or, better still, contact us today to put the wheels in motion, whether you're selling and/or buying.