Affordability Index Charts

“Forecasting the real estate market may not be an exact science but it is the only science we have.”

I have created an enhanced variation of the National Association of Realtors “Affordability Index” The index charts the median contract price and an affordability base line.

The median contract price for each month is obtained from the Multiple Listing Service of Long Island.

The median income is obtained from http://factfinder.census.gov. Click here to see a PDF of the 2007 data.
Current interest rates are obtained from http://www.hsh.com/mtghst.html which monitors national mortagage statistics.

The base line is calculated by how much of a mortgage 25% of the median income for that county could purchase using prevailing interest rates for that month. It is understood that the mortgage is only principal and interest (P& I) and does not include taxes.

A 25% ratio for P& I seems to be pretty accurate in Nassau and Suffolk counties due to the fact that taxes average 7% to 8% of the median income. If you added the 7% to 8% to the 25% ratio you would have a total ratio to 33% of the income going for principle, interest and taxes; however, the ratio of 25% seems a little low in Queens where the taxes are less.