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Breakingviews Housing Affordability Index

As housing prices in America rise and the Fed lifts interest rates, affordability will plunge by 2017. Click here for full story

Median existing
home price 2014

(NAR, April 2014)

Mortgage
rate 2014

(Freddie Mac, June 12, 2014)

Average annual
income growth

2014-17^^

Average annual home price growth

2015-17^

Increase in mortgage interest rates by 2017

percentage points^^^

$201,700
4.2%
3.7%
5.4%
3.75%
Notes: * Modelled on the National Association of Realtors' Housing Affordability Index
Affordability = median income / (4 x mortgage payments on median home)
^ NAR median existing home price was up 5.4% annualized May 2011-April 2014
^^ Bureau of Economic Analysis personal income was up 3.7% annualized Q3 2009-Q1 2014
^^^ Federal Reserve, as of June 2014, forecasts short term rates 3.75% higher over the long-run
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