Massachusetts Home Buyer Guide

With data available through November, 2012 will go down as a record year for favorable housing affordability conditions, and a great year for home buyers who could obtain a mortgage, according to the National Association of Realtors (NAR).

NAR's national Housing Affordability Index stood at 198.2 in November, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power. The data have been kept since 1970.

Obviously, Massachusetts home buyers don't have the same buying power as other home buyers around the country because of the high cost of real estate in the Bay State. The same is true, to a lesser extent, in New Hampshire.  

An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20 percent downpayment and 25 percent of gross income devoted to mortgage principal and interest payments. For first-time buyers making smaller down payments, the affordability levels are relatively lower.

For all of 2012, NAR projects the housing affordability index to be a record high 194, up from 186 in 2011, which was the previous record.

NAR projects the housing affordability index to average 160 during 2013, which means on a national basis that a median-income family would have 160 percent of the income needed to purchase a median-priced existing single-family home. Affordability varies widely, with the highest home-buying power in the Midwest. Even in the West, where the regional index is lower, the typical family is well positioned in most markets, NAR reports.