“Though the price of homes may still be rising, the cost of purchasing a home is actually falling.”
The gap between the increase in personal income and residential real estate prices has been used to defend the concept that we are experiencing an affordability crisis in housing today.
It is true that home prices and wages are two key elements in any affordability equation. There is, however, an extremely important third component to that equation: mortgage interest rates.
Mortgage interest rates have fallen by more than a full percentage point from this time last year. Today’s rate is 3.75%; it was 4.86% at this time last year. This has dramatically increased a purchaser’s ability to afford a home.
Here are three reports validating that purchasing a home is in fact more affordable today than it was a year ago:
“Falling mortgage rates and slower home-price growth mean that many buyers this year are committing to lower mortgage payments than they would have faced for the same home last year. After rising at a double-digit annual pace in 2018, the principal-and-interest payment on the nation’s median-priced home – what we call the “typical mortgage payment”– fell year-over-year again.”
“At the national level, housing affordability is up from last month and up from a year ago…All four regions saw an increase in affordability from a year ago…Payment as a percentage of income was down from a year ago.”
“In 2019, the dynamic duo of lower mortgage rates and rising incomes overcame the negative impact of rising house price appreciation on affordability. Indeed, affordability reached its highest point since January 2018. Focusing on nominal house price changes alone as an indication of changing affordability, or even the relationship between nominal house price growth and income growth, overlooks what matters more to potential buyers – surging house-buying power driven by the dynamic duo of mortgage rates and income growth. And, we all know from experience, you buy what you can afford to pay per month.”
Though the price of homes may still be rising, the cost of purchasing a home is actually falling. If you’re thinking of buying your first home or moving up to your dream home, let’s connect so you can better understand the difference between the two.
To view original article, visit Keeping Current Matters.
If you’re thinking of selling your home, buyer demand is high – and those looking in your neighborhood aren’t giving up anytime soon.
Homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you’re contributing to your net worth.
Don’t let these common myths get in the way of owning the home of your dreams. More often than not, your dream home is within your reach.
Spacious, one of a kind, waterfront home on Areskonk Creek in Center Moriches.
Before you renew your lease, find out if you can put your housing costs to work by buying a home this year. Call BrookHampton Realty today!
Some are afraid the real estate market may be looking a lot like it did prior to the housing crash in 2008.