It’s Hard to Believe, but Today’s Homes are Affordable
It’s no secret, home prices have skyrocketed. In fact, according to CoreLogic’s April 2021 Home Price Index report, home prices increased 13 percent year-over-year and 2.1 percent monthly in April. Coupled with lack of inventory, today’s housing market could be quite tricky to navigate. With that in mind, we’re guessing you wouldn’t believe us if we told you houses are actually quite affordable. We agree, it sounds outlandish given the state of the current housing market, but the truth of the matter is that home prices aren’t the only thing that determine affordability.
In reality, mortgage rates and percentage of income spent on mortgage payments play an arguably larger role in determining affordability than home prices alone. So with wages rising and interest rates remaining incredibly low, median home prices are considered affordable for the average worker. The median income needed to qualify is also much lower than in the past, and buyers can generally afford homes with a larger price-tag. For example, according to the Arch MI Insights blog, buyers can now afford a $318,000 home instead of a $300,000 home without a change to their monthly mortgage payment. That’s a prime example of how interest rates contribute to purchase power, and how homes today are actually more affordable than ever.
With home prices expected to continue to rise, current home owners should see a large increase in the value and equity of their home in the coming years. Again, it may seem daunting to purchase in this market, but you can either be among those who took action, purchased a house and are building equity or you can be among those paying the price of waiting. Don’t let today’s headlines scare you, having a team on your side to help you through the process makes all the difference. If you’re ready to buy a home, connect with one of our trusted Mortgage Consultants today by calling 952-942-0110 or visit www.CambriaMortgage.com and request a free rate quote. Doing so sooner rather than later may save you a significant amount of money over time.
ATTOM Staff. (2021, April 5). Homeownership Remains Affordable Despite Price Spikes. ATTOM. https://www.attomdata.com/news/market-trends/home-sales-prices/attom-data-solutions-q1-2021-u-s-home-affordability-report/.
CoreLogic. (2021, April). Home Price Insights. CoreLogic. https://www.corelogic.com/insights-download/home-price-index.aspx.
Hughes Babb, C. (2021, April 1). Why Home Prices Don’t Tell the Whole Affordability Story. theMReport.com. https://themreport.com/daily-dose/04-01-2021/why-home-prices-dont-tell-the-whole-affordability-story.
Jumpe, J. (2020, December 09). Five Positive Messages for Millennial Homebuyers.
KCM Crew. (2021, March 2). How Smart Is It to Buy a Home Today? Keeping Current Matters. https://www.keepingcurrentmatters.com/2021/03/03/how-smart-is-it-to-buy-a-home-today/.
KCM Crew. (2021, May 25). Buying a Home Is Still Affordable. Keeping Current Matters. https://www.keepingcurrentmatters.com/2021/05/26/buying-a-home-is-still-affordable/.