Easy and Affordable. That’s a Win.
Indianapolis has long been known as an affordable market. That designation is generally arrived at when housing analysts and economists compare the median income of a region to the median housing price. The higher percentage of people who earn the median income – thus able to afford the median price – the more affordable an area is. It’s called an Affordability Index and the Indy market has traditionally ranked high, if not the highest, on that index.
Realtor.com recently launched a new index – the EasytoBuyIndex. It considers affordability, but only as one factor. It also takes into consideration the total costs of home ownership, the condition of the rental market and factors such as insurance, taxes and supply of available homes.
According to Realtor.com, the index combines four factors with equal weight:
- Average 30-year fixed-rate mortgage
- Number of homes for sale per 1,000 owner-occupied households
- Percentage of median household income it takes to buy a home at the median list price
- Percentage of active inventory below the maximum affordable price (determined by assuming a 28 percent loan-to-income ratio, median income, and a 20 percent down payment)
Another positive finding is that of all the top 10 markets in the index, each had between 1 and 10 percent appreciation in the last 12 months. Central Indiana’s 12-month track record is a 5.1 percent increase in median price and a 4.5 percent increase in average sales price, clearly making central Indiana a good place to own a home. What other cities popped up on the Index? Memphis, Virginia Beach, Birmingham, Cincinnati, Pittsburgh, Atlanta, Cleveland, Detroit and Columbus.