Economics of Housing Affordability
From an economic perspective, this could be one of the best times in American history to buy a home.
Black Night Financial Services reported the following in their most recent Monthly Mortgage Monitor.
- The average U.S. home value increased by $13,500 from last year, but low interest rates have kept the monthly principal & interest payment needed to purchase a median-priced home almost equal to one year ago.
- Home affordability still remains favorable compared to long-term historic norms.
So even though home prices have increased over the last year, the monthly principal and interest is just about the same had you bought it last year due to lower interest rates.
However, the report warns that affordability will be dramatically impacted by an increase in mortgage rates.
“A half-point increase in interest rates would be equivalent to a $17,000 jump in the average home price, and bring that ratio to 21.5 percent. This increase is still below historical norms, but puts more pressure on homebuyers.”
Real Estate Bottom Line
If you are ready to purchase a home, let’s get together to make it happen!