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Affordability -- And Why It’s Not Improving

You might think that with headlines that shout about plummeting home prices that the silver line to this cloud over housing would be affordability. Lower prices mean more people can buy houses, right?

Wrong.

The National Association of Realtors reports that affordability fell in July for the sixth month in a row. The issue is, not surprisingly, mortgage rates and availability. The median family income has actually been going up bit by bit, according to the Realtors, and home prices have been coming down, but the monthly mortgage payment as a percentage of income has been steadily rising. There goes your affordability.

What’s interesting to me about the Realtor’s report is that it still shows the affordability index as over 100, 100 being the line where a buyer with the national median income can afford the national median-priced home. Of course, we all know that all real estate is local, and if you make a median income in New York City or really any of the major metropolitan markets, your affordability is about nil.

National affordability numbers, along with any national housing numbers really don’t mean anything to anyone in any particular market. But politicians and economists tend to like these big fat scary numbers because they make the case for policy.

Questions? Comments? RealtyCheck@cnbc.com