Affordability increasing nationwide

According to the survey of Realtors nationwide released by Bank of America today, the index of affordability is rising.

Affordability tends to drive sales activity; mortgage rates are critical. We believe that affordability is the key determinant of sales and that the downturn in sales activity since mid-’05 was driven by the lack of affordability as home prices and mortgage rates both increased and limited the pool of potential buyers. We think the improving affordability will translate into better sales activity as the year progresses, but acknowledge that it is significantly dependent on mortgage rates.

Here in Chicago, when interest rates dropped, we saw a marked increase in contracts written companywide which should drive the sales figures for the months of March and April.