An earlier post on rent-to-own programs triggered a discussion on whether median home prices in Chicago have outpaced median income levels.
That discussion echoes the National Association of Realtors (NAR) Housing Affordability Index (HAI) – a single number that stands as a proxy for progress toward the NAR’s goal of universal homeownership.
The NAR HAI “measures whether or not a typical family could qualify for a mortgage loan on a typical home. A typical home is defined as the national median-priced, existing single-family home as calculated by NAR. The typical family is defined as one earning the median family income as reported by the U.S. Bureau of the Census.”
The HAI concept has great explanatory power when applied to the state of the national single-family market for existing homes, but tells us nothing useful when translated to new construction at the city level – YoChicago’s coverage area.
New construction in the city is a niche product, and much of it is calculated to draw buyers from beyond the city’s boundaries. Let’s put an end to the discussion of median family incomes vs median prices.