A Closer Look at Housing Affordability in Douglas County

The typical household in Douglas County can no longer comfortably qualify for the median-priced home. The 2026 YTD Housing Affordability Index (HAI) is 79.4, well below both the neutral benchmark of 100 and the 2000-2026 annual average of 115. The HAI formula assumes a 20% down payment and mortgage payments limited to 25% of monthly household income. Under these very conservative parameters, a local family earning the median household income has only about 79% of the income needed to qualify for the median-priced home. If the HAI reads 100, it means a local family has exactly enough household income to qualify for the median-priced home.

The income comparison makes this more tangible. Median household income in Douglas County is approximately $61,341 (2026), while the estimated income needed to qualify is $77,248. That is a shortfall of roughly $15,900: the typical household would need about 26% more income than it presently earns. Affordability improved slightly from the 2023 low, when the HAI was 74.7, and the qualifying-income requirement has declined from approximately $80,686 in 2025. Nevertheless, an HAI of 79.4 remains severely constrained by Douglas County's historical standards.

The longer history shows that this deterioration occurred abruptly rather than gradually. The HAI was 128.1 in 2020 and 110.7 in 2021 before falling to 81.3 in 2022. That corresponds with the transition from approximately 3.0% mortgage rates in 2021 to 5.3% in 2022 and 6.8% in 2023. Home prices did not fall enough to offset the payment shock. Although the average 30yr mortgage rate has moderated to approximately 6.3% YTD in 2026, it remains materially above the 2000-2026 average of 5.25%.

Buyers have not disappeared, but the pool of financially capable buyers has narrowed. Many households must purchase a less expensive home, contribute a larger down payment, accept a higher payment-to-income ratio, or postpone purchasing. That reduces buyer urgency and transaction volume even though underlying housing needs remain.

The slight HAI improvement since 2023 is encouraging, but it represents stabilization at a poor level rather than restored affordability. Meaningful recovery would require some combination of rising incomes, lower mortgage rates, or home prices remaining relatively flat long enough for household earnings to catch up. At present, affordability is the principal restraint on Douglas County housing demand.

Aaron's Insights

Every year in Douglas County, approximately 30% of properties sell to cash buyers, 35-40% to buyers with conventional (CONV) loans, and 25-30% are sold to buyers with federally backed mortgages with no or very small down payments (FHA, USDA, VA). The remaining 2-5% are sold owner-carry or other forms of financing.

When we discuss the HAI, the metric primarily envisions buyers with CONV loans who are more likely to have larger down payments (20%+). If you think about it, the affordability index is worse for buyers using federally backed mortgages. If well-qualified borrowers have only 79% of the household income needed, buyers with fewer financial resources have even less.

Douglas County Stats