A home purchase is usually the most important one in our lifetime. Obviously, the price needs to be manageable to our income flows. Otherwise, financial hardship can easily follow, as the events of the 2008-2009 Great Recession illustrated. Further, a high percentage of homeownership is a policy goal of many elected officials and non-profits: ownership is said to lead to a greater sense of participation in the life of a community, and ultimately, in society.
From an economic development perspective, housing prices can impact a community's ability to attract and retain workers. For many reasons, then, it is in the interest of a broad range of parties to see "affordable" home prices in their community. This sentiment is especially true when directed at first-time home buyers Their purchase is seen as the start of an advancement in wealth accumulation, and of course, a higher standard of living.
The first-time Home Buyers Affordability Index (HAI) is calculated and maintained by the Washington Center for Real Estate Research (WCRER). The Index expects first-time homebuyers will purchase a less expensive home, face a lower down-payment, and report a lower income than area averages. Specifically, the Index measures the ability of a typical family, as measured by household income at 70% of the median, to purchase their first home. The home price is assumed to be 85% of the area's median price. Transactions assumptions of the index are: 10% down payment and a 30 year fixed mortgage.
A central assumption behind the index is that the household does not spend more than 25% of its income on principal and interest payments. When the index lies at 100, the household pays exactly this share of its income to principal and interest. When the index lies above, it pays less. When the index lies below, the household pays more. Note that this index carries values that are almost always lower than those of the All Buyers Affordability Index indicator.
This indicator measures the quarterly calculations of the first-time buyers Home Affordability Index (HAI) for Walla Walla County. The first-time home buyers HAI for Washington State is offered as a benchmark. Additional information, including historical data beginning in the first quarter of 2001, can be found in the “Download Data” section.
