Learning about the Housing Affordability Index (HAI)
Housing attainability across most price points continues to be a challenge. Mortgage rates have effectively doubled from year-end 2021 and the continued increase in median home prices have strained the ability of buyers with a median family income to purchase a home.
When buying a median-priced home for $520,000, at an interest rate of 6.625 percent on a 30-year conventional mortgage and a down payment of 5 percent, the income needed to be at 30% of the estimated mortgage payment is $160,897 per year. If you overlay this data point with the Census Median Family income projection of $80,200 for 2022, the buyer of this scenario would be short approximately $80,697 in annual gross income. This roughly translates into a Housing Affordability Index (HAI) of 50 (see page 9 of the visualization.)
In the scenario where the borrower has a 20% down payment, the income needed for the same purchase was $133,674, still $53,474 short with an HAI of 60.