Headlines spotlight the fact that buying a home is less affordable today than it was at any other time in more than a decade. Those headlines are accurate.
Understandably, buying a home is more expensive now than immediately following one of the worst housing crashes in American history. Over the past decade, the market was flooded with distressed properties (foreclosures and short sales) selling at 10-50% discounts. There were so many that this lowered the prices of non-distressed homes in the same neighborhoods. As a result, mortgage rates were kept low to help the economy.
Prices have since recovered. Mortgage rates have increased as the economy has gained strength. This has impacted housing affordability. However, it’s necessary to give historical context to the subject of affordability.
Two weeks ago,CoreLogicreportedon what they call the“typical mortgage payment”.As they explain:
“One way to measure the impact of inflation, mortgage rates and home prices on affordability over time is to use what we call the ‘typical mortgage payment.’ It’s a mortgage-rate-adjusted monthly payment based on each month’s U.S. median home sale price. It is calculated using Freddie Mac’s average rate on a 30-year fixed-rate mortgage with a 20 percent down payment...
The typical mortgage payment is a good proxy for affordability because it shows the monthly amount that a borrower would have to qualify for to get a mortgage to buy the median-priced U.S. home…
When adjusted for inflation, the typical mortgage payment puts homebuyers’ current costs in the proper historical context.”
Here is a graph showing the results ofCoreLogic’s research:
As the graph indicates, the most recent calculation remained 28% below the all-time peak of $1,275 in June 2006. That’s because the average mortgage rate at that time was 6.68%. As seen in the graph, both today’s typical payment andCoreLogic’sprojection for the end of the year are less than it was in January 2000.
Even though home prices are appreciating at a slower rate, home affordability will likely continue to slide. However, this does not mean that buying a house is an unattainable goal in most markets. It is still less expensive today than it was prior to the housing bubble and crash.
Author:Matt Watson Phone: 214-417-9171 Dated: February 7th 2019 Views: 387 About Matt: ...
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You're excited about your next big move: You want to buy, build or sell a home in central Dallas, the urban heart of high-style Texas living. But you don't want to fight with paperwork or negotiate details. You just want a real estate agent who can.
I'm Matt Watson. I've worked with young professionals looking for upscale, uptown residences as well as empty-nesters looking to scale down and kick back. I've sold condos, townhouses, lofts, high-rises and homes (historic and otherwise) all over Dallas. And I know how to make your real estate purchase or sale easy and hassle-free.
If you're buying a home, I will:
Help you find a resid ence that matches your lifestyle.
Give you instant access to the Dallas Multiple Listing Service.
Help you find financing that works.
If you're building a home, I will:
Help you locate the right building site.
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Help you select a qualified builder and coordinate construction.
If you're selling a home, I will:
Price your property based on market conditions and your personal goals.
Help you enhance your home's market appeal.
Market your property to the right buyer, not just any buyer.
And whether you're buying a home or selling a home, I will:
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Always give you the facts you need to make the right decisions.
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"Matt has represented us in 4 different buying and selling occasions. First of all, he sold the unsellable – a condo in Downtown Dallas in a saturated, buyers’ market. That was after going through three realtors prior to meeting Matt. He then helped us sell our next house by being very honest with us in how we should prepare for showings. Matt then helped negotiate our house purchase in Lake Highlands that required some very intricate details in how the seller was to address a few major concerns before closing. Lastly, we listed our house a few years later to only have our house under contract and sold by the FIRST buyer that viewed the house. We would only trust Matt for any and all real estate endeavors."
Jim & Alicia Philips Downtown, Lake Highlands, East Dallas, TX