Home affordability- Home Builders/Wells Fargo Housing Opportunity Index(HOI)... What does it mean?
It is the Share of homes that families making the national median income, $64,400, can afford to buy.
And, its remained above 70% for the 6th straight quarter... Good news, right?
This index, like all economic indicators should remind us that Real Estate is a local business. We need to ask, "What is affordable here in Connecticut? In Fairfield County? In Trumbull, Stratford, Shelton, or Monroe? What is affordable for me?"
When data comes out giving us good or bad news the important question to ask is, "what is my Personal Affordability Index?"(PAI.. yes, I made that up)
When I first started in business, 23 years ago, we worked off the 28/36 rule, 28% of your gross monthly income for Mortgage principle, interest, taxes, and insurance and 36% of your gross monthly income for living expenses and debt... Use the 28/36 rule to figure out you PAI.
Ask yourself, "What price range can I live comfortabily with? What bells and whistles can I live without, temporarily, to keep my PAI in the right zone?"
Now tell me, what is your Personal Affordability Index?
By Stacy Pfannkuch on September 13, 2010
The Kasey Group Sells...