Whether you’re making the jump into homeownership or re-evaluating your current home and considering a move, understanding how housing affordability works is always important. It may help those who are ready to buy a home narrow down the optimal window of time in which to make a purchase.
There are three main factors that go into determining how affordable homes are. They are mortgage rates, mortgage payments as a percentage of income, and home prices.
The National Association of Realtors (NAR) produces a Housing Affordability Index. It takes these three factors into account and determines an overall affordability score for housing. Their data shows that homes are more affordable now than they’ve been at any point since the housing crash when distressed properties dominated the market. Those properties were sold at large discounts not seen before in the housing market.
Why are homes so affordable?
The factor that’s playing the largest part in today’s homebuying affordability is historically low mortgage rates. Based on this factor, it’s more affordable to buy a home today than at any time in the last eight years.
Nevertheless, if you’re considering purchasing your first home or moving up to the one you’ve always dreamt of, it’s important to understand how affordability plays into your overall cost.
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. Let’s connect today to determine if now is the right time for you to make your move!