By The Star Staff
The Affordable Housing Index, prepared by Estudios Técnicos Inc. (ETI), showed a continued deterioration in housing affordability during the first quarter of 2024.
The decline is attributed to rising home prices and high mortgage interest rates, according to Leslie Adames, director of economic policy and analysis at ETI.
“The index value fell from 70 percent in the first quarter of 2023 to 54 percent in the same period in 2024,” Adames noted in a written statement.
That means that a person wishing to apply for a mortgage loan today would only have 54 percent of the income necessary to qualify.
The Housing Affordability Index measures whether a typical family, with 20% down payment, has enough income to qualify for a mortgage at the median market rate. An index of 100% indicates that income is sufficient, while lower values reflect insufficient income.
The average price of homes sold rose 25%, from $179,649 in the first quarter of 2023 to $224,484 in the same period in 2024, according to the Office of the Commissioner of Financial Institutions. The increase occurred in both new homes, up 36%, and existing homes, up 24%.
The increase in prices, combined with the rise in mortgage interest rates, has reduced home sales, which fell from 3,326 units in the first quarter of 2021 to 2,255 units in the same quarter in 2024.
Adames cautioned that while the Federal Reserve is expected to cut interest rates in September, it won’t necessarily see mortgage rates go back to pre-pandemic levels. The federal government’s fiscal situation and other factors could keep interest rates elevated, further limiting housing affordability.
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