Study Shows Homes Becoming More Affordable

Home sales have reached record levels for four consecutive years, and experts expect 2005 to continue the trend. A recent study shows that while home prices may be increasing, they are actually becoming more affordable and now may be the best time to make the big purchase.

Whether you are a first-time homebuyer or entering the marketplace as a repeat buyer, you need to know what you want to buy and if you can afford it. The National Association of Realtors' composite Housing Affordability Index was up slightly during the fourth quarter of 2004.

The median family income stood at $55,239. The index shows that a typical family had 131.8 percent of the income necessary to buy the median existing-home at $187,500.

The association said declining mortgage interest rates and rising family income helped improve affordability conditions. The index measures affordability factors for all homebuyers making a 20 percent down payment, with an index of 100 defined as the point where a median-income family has the exact amount of income needed to purchase a median-priced existing home.