It’s not just that housing prices in New Jersey are generally lower, but the affordability index in the Garden State has increased too.
The NATIONAL ASSOCIATION OF REALTORS® affordability index formula accounts for many variables that contribute to how affordable home buying is in New Jersey: home price, mortgage rates, payment as a percentage of income, median family income, qualifying income, and monthly Principal and Interest (P&I) payments. For example, an affordability value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home, assuming a 20-percent down payment.
View the chart below of median home price in New Jersey's metropolitan statistical areas, as compared to the national and regional figures. Note: The chart reflects the data for the first quarter of 2013. The far right column reflects the percent change compared to the same quarter one year ago.
The chart below is representative of the qualifying income in N.J. Based on some assumptions (down payment, 4% mortgage rate, 30 year fixed rate mortgage, 25% payment to income ratio) it calculates the qualifying income needed to purchase the median priced home for metro areas.