The last year has emphasized the importance of one’s home. As a result, some renters are making the jump into homeownership. At the same time, some homeowners re-evaluate their current house and consider a move to one that better fits their current lifestyle. Understanding how housing affordability works and the main market factors that impact it may help those ready to buy a home narrow down the optimal window of time to make a purchase.
Three main factors go into determining how affordable homes are for buyers:
- Mortgage Rates
- Mortgage Payments as a Percentage of Income
- Home Prices
The blue bar represents today’s affordability. We can see that homes are more affordable now than they’ve been at any point since the housing crash when distressed properties (foreclosures and short sales) dominated the market. Those properties were sold at large discounts not seen before in the housing market for almost one hundred years.
Why are homes so affordable today?
Although three factors drive the overall equation, the one that’s playing the largest part in today’s homebuying affordability is historically low mortgage rates. Based on this primary factor, we can see that it’s more affordable to buy a home today than at any time in the last eight years.
If you’re considering purchasing your first home or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home. With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.
If you feel ready to buy, purchasing a home this summer may save you a significant amount of money over time based on historical affordability trends. So let’s connect today to determine if now is the right time to make your move.