1st Time Homebuyer Affordability Index

The MAR Maryland First Time Homebuyers Affordability Index (MDHAI) is a monthly indicator of the affordability of a starter home for a typical first time Maryland homebuyer. 

An index of 100% means that this homebuyer, aged 25-44, has enough income to buy the typical starter home at current effective interest rates. 

An index less than 100% means that the homebuyer has less than the required income. The price of a starter home, determined by the National Association of REALTORS® survey results, is currently calculated at 85% of the median price of Maryland homes for the month. This calculation determines the price that first time buyers typically pay. 

For example, in the second quarter of 2016, the index level of 76.6% meant that in that three-month period, the typical first time homebuyer had only about three-quarters of the income needed to buy a starter home. The index fluctuates based upon changes in home prices, interest rates and income. When prices or interest rates rise, or income falls, affordability declines and the index drops. When prices or rates fall, or income rises, affordability increases and the index rises. 

MAR has calculated the index since 2000. In that time, the highest level of affordability was reached in the first quarter of 2014, when the index peaked at 84.1%. At that level, homebuyers still lacked 16 percent of the income needed to buy a starter home. 

For more information about the calculation of the index, including loan terms, interest rate calculations and other information about the way the index is calculated, click here