Turn on the television, open the newspaper, or ask any random person walking down the street and they will tell you that the housing market is flat and homes aren’t selling.

Really?  Well, the market is certainly sluggish (and perhaps flat in some areas) and there is a lot of housing inventory out there to work through (aka “choices” or “opportunities”), and very likely more housing inventory coming to the market in the coming months.  At the same time there are tons of buyers out there buying.  Yes, I said tons…as in 5.1 million of ‘em (annually).

Home Opportunity Index

Let’s put a pencil to the math….

*based on a 12 hour work day / 7 days a week

Homes are selling.  People are buying.  And the price is right.

Affordability has never been better.  The Housing Opportunity Index is at the highest level as of 4th Quarter, 2010 at a whopping 73.9%.  Take a look…

The last time the median price home cost $176K with an interest rate in the 5’s was…2003.  Before that…well, it was more than 40 years ago that interest rates on any home, regardless of price point, was in the 5’s.

Notice the Home Opportunity Index in the two charts above. In 2003, when interest rates were in the 5′s and prices were at $176K, the “opportunity” was at 63.7%. And in the top chart, 2010, the same home prices with interest rates in the high 4′s gives us an “opportunity” of 73.9%! Quite a difference.

One year later, in 2004,  the prices rose 25% from $176K to $219K and the index drops over 10%.

NAR Chief Economist Yen had this to say recently, “existing-home sales should rise around 5 to 10 percent this year.”

The data is clear – this is the best time to purchase a home.  Will you be buying…and at what interest rate?


Happy House Hunting!

Elizabeth Rose