Here’s how homes are more affordable now than they have been in 50 years.
Today I’ll talk about home affordability in today’s market because, as you might know, home prices have been on the rise.
At 0:36 in the video, you can see that prices have been rising over the last 50 years, except for the period right after the great recession. Following that, they ramped up again and have not given up any steam.
At the same time, interest rates are at historic lows. At 1:06 in the video, you can see that interest rates have been hovering around 3% to 4% over the last five years. The graph at 1:32 in the video shows interest rates over the last 50 years. Today’s low rates have made mortgage payments lower than they have been in that entire period. How does that affect home affordability?
Home affordability is traditionally measured in the percentage of a buyer’s income they’re going to spend on their mortgage payment. At 2:05 in the video, you can see how affordable homes have been over the past 50 years. The National Association of Realtors is quoting that 14.1% is the percentage of income buyers need to spend on their mortgage.
To sum it all up, despite home prices at all-time highs, with interest rates at all-time lows, it comes together to make homes very affordable. If you have any questions, please send me an email or text. I’d love to help you.