What Does HOI Mean in Real Estate?

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What Does HOI Mean in Real Estate?

What does HOI Mean? graphic


As we’ve seen in prior blog posts, navigating the real estate market can often feel like learning a new language. One term you are likely to encounter is HOI or the Housing Opportunity Index. It sounds pretty official, right? But what exactly is it? Let’s dive into the world of HOI and understand its role in real estate.

What is HOI?

The Housing Opportunity Index (HOI) is a measure developed by the National Association of Home Builders (NAHB). Based on standard mortgage underwriting criteria, it calculates the percentage of homes sold in a given area that are affordable to a family earning the median income. So, HOI is a snapshot of how accessible homeownership is to the average family.

Importance of HOI

As an Indicator

HOI is a crucial barometer for gauging housing affordability in different areas. A higher HOI indicates that more affordable housing options are available.

For Investors

Potential homebuyers and real estate investors can use the HOI to guide where to look for property. Areas with a high HOI are likely more financially feasible.


For policymakers, HOI provides insights into the housing market’s health and the effectiveness of affordability initiatives.

Popular Confusions

HOI vs. real estate prices

It’s important not to confuse HOI with average real estate prices. While related, HOI precisely measures affordability relative to income, not just housing cost.

HOI is not a universal measure

HOI varies significantly across different regions and even within cities. It’s not a one-size-fits-all measure –– it’s a local snapshot.

How to Make the Best Use of This Information

Understanding the HOI can be a game-changer when making real estate decisions. Whether you’re buying, investing, or just keeping an eye on the market, knowing the HOI helps you understand the economic landscape and make informed choices.

When using HOI in your decision-making, don’t make the mistake of not accounting for other living expenses, assuming that a high HOI means all areas of a city are affordable. Also, remember that HOI is based on median incomes, and your financial situation is particular to you. So, always consult with a real estate professional before making big decisions. The bottom line is whether you can afford the house you love, but understanding HOI can be helpful.

HOI helps you understand your purchasing power in different regions. It provides a broad view of the housing market and keeps expectations realistic. Remember, if the HOI is low, it might indicate the need for a higher down payment. So, use the HOI number to compare different areas and determine where your income will stretch further. If you’re an investor (or looking to sell), the HOI can indicate the long-term viability of the property.

Here Are Tips to Factor HOI into Your Real Estate Decisions

Research Local HOI Trends

Look at how the HOI has changed in areas that interest you over time. This can indicate the market’s direction and potential for future affordability.

Consider the Bigger Picture

HOI is just one metric among many. Consider other factors like employment rates, economic growth, and future development plans.

Plan for the Long Haul

Real estate is typically a long-term investment. Consider how HOI trends might affect your investment in the future.

What Else Do I Need To Know?

According to the NAHB/Wells Fargo Housing Opportunity Index, in the first quarter of 2023, 45.6% of new and existing homes sold were affordable to families earning the U.S. median income of $96,300. This figure rose from 38.1% in the final quarter of 2022 but is significantly lower than the 56.9% recorded a year earlier. Housing affordability​​ is an issue. Note: the least affordable major housing markets in the U.S. are in California. 

Given these data, it’s evident that understanding the HOI is particularly crucial in Northern California. This tool isn’t just a barometer for market trends; it’s a compass guiding potential homeowners through the complex terrain of affordability. The HOI provides invaluable insights in a region where the juxtaposition of skyrocketing tech salaries and limited housing supply creates a unique market dynamic. It helps buyers gauge their purchasing power. For sellers, it’s a window into the current economic landscape, offering a clearer understanding of the buyer’s perspective.

Ultimately, the HOI isn’t just a statistic; it’s a big part of the Bay Area real estate narrative, helping buyers, sellers, and investors make informed decisions in a changeable and challenging market. Because of these specialized market details, finding an agent with extensive experience in your desired market is more critical today than ever. You’ll get advice from years of knowledge and boots on the ground.