Homes have not been this affordable in nearly two decades. In the second quarter of this year the typical American family, making the nation's median income of $64,000 a year, could afford to buy 72.3% of all homes sold in the United States. The same time last year it was only 55% of homes. This affordability, combined with the federal tax credit and historically low mortgage rates, is drawing in the first-time buyers.
Affordable specifically means a family making the metro area's median income who devote no more than 28% of their take-home pay toward housing costs.
The reason for this affordability is that home values have dropped. 30% of all homes sold during the second quarter went for less than what the sellers originally paid. This was mostly the newer home owners who had bought in the last five years when prices were rising rapidly.
So although home owners have watched the value of their investment plummet, the silver lining is affordable housing. Affordable housing means interested buyers. Interested buyers means an economic recovery.
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