The Washington Post

Buying a house is harder than it’s been in five years.

If you're the typical American house hunter, might want to avoid looking at the following graph.


That's right: According to the National Association of Realtors, it's almost as hard to afford a house as it was back when the financial crisis started to hit in 2008. But is that good or bad for the economy?

Well, both. The Affordability Index is based on median household income, home prices, and interest rates. As the housing market has recovered, prices are on the rise.

That's generally seen as a positive sign. Meanwhile, though, median household income hasn't risen as quickly.

(Sentier Research)

And at the same time, mortgage rates have increased dramatically over the past year.

So the index is a reflection of a few indicators that the economy is doing well, plus the countervailing force of incomes that haven't quite kept up. It's important to note, though, that the NAR's index is still in positive territory: The 100 marker means that the median household can qualify for a 30-year fixed-rate mortgage on the median-priced home, with a 20 percent down payment. So at the moment, the typical household makes 160 percent of what it needs to afford the typical mortgage.

It's not the same for everyone, though: You're worse off in the West, and better off in the Midwest, where the median home can still be had for $169,000.

Lydia DePillis is a reporter focusing on labor, business, and housing. She previously worked at The New Republic and the Washington City Paper. She's from Seattle.



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