UA study: Alabama homes sweet deal

According to a new University of Alabama study, homes around the state are more affordable than ever.

The university's Alabama Center for Real Estate reports a fourth-quarter 2009 of 211.2. The center calculates the affordability index as the ratio of the state's median family income to the income needed to purchase and finance the state's median-priced home. An index of 100 means that a family earning the state's median income has just enough buying power to qualify for a loan on the state's median-priced, single-family home. The higher the index number is, the more affordable the home.

An index of 211 means a family that earned the statewide median income of $53,200 had more than double the income needed to qualify for a loan to purchase the statewide median priced home, at $121,242. That's a 9.57 percent drop from the previous quarter. Interest rates also dropped, from 5.31 percent in the third quarter to 5.07 percent in the fourth quarter.

In the Huntsville market, which includes part of Morgan and Limestone counties, the housing affordability index was even higher, at 224.9, compared with 211.1 in the third quarter and 194.6 in the fourth quarter 2008. Last quarter's index for the Huntsville area reflects a median family income of $67,500 and a median home price of $144,433.

The national housing affordability index was 177.5 in the fourth quarter, compared with 168.6 during the third quarter.

Commercial crisis?

Concerns about the commercial real estate market continue to snowball. Sen. Christopher Dodd, D-Conn., this week urged federal regulators to step up efforts to avert a crisis.

A congressional panel released a report this month warning that $1.4 trillion in loans set to expire during the next four years, at a time when many of these properties are "under water," meaning they are worth less - in some cases up to 40 percent less - than what is owed on the loan. This could wreak havoc on the nation's small- to mid-sized community banks, which hold most of these loans.

If a commercial bomb drops, the results could be grim: Foreclosures on commercial buildings and apartment complexes could leave employees without jobs and families without homes, even though tenants have paid rent on time, the panel said.

But others think the bottom may have already been hit. An article on HousingWire points to two months of rising commercial real estate prices, based on a Moody's Investors Service report. Moody's says the 4.1 percent gain in prices in December was the largest gain in nine years, and followed a 1 percent gain in November.

Seems nobody has enough Windex to wipe this crystal ball clear. Stay tuned.

Contact Gina Hannah at gina.hannah@htimes.com or 532-4531.