Home prices have slowed a bit in some areas, but they continue to climb in the majority of markets in the U.S. Inventory is stubbornly low in many parts of the country, but even with these factors, now is actually a good time to purchase.
Believe it or not, research shows that housing has actually become more affordable this year, despite home appreciation and tight inventory. Affordable homes are possible thanks to lower mortgage rates and greater purchasing power.
“Affordability is about the best it can be compared to what it is likely to be over the next few years. So, in that sense, it’s a good time to buy right now if you have the financial means.” –Lawrence Yun, Chief Economist, National Association of Realtors
However, this positive development may not last for too much longer. That’s why it pays to hunt for homes and mortgage rates now, as waiting could prove expensive.
What The Numbers Show
Martin highlights a Black Knight study (found here) that shows “housing affordability hit nearly a three-year high in September.” Other findings from the report include:
- The drop in mortgage rates since November has been enough to amp up buying power by $46,000 while keeping monthly principal and interest (P&I) payments the same
- The monthly P&I needed to buy an average-priced home is $1,122. That’s down about $124 a month from November 2018, when interest rates were near 5%
- Monthly P&I payments now require only 20.7% of the national median income. That marks the second-lowest national payment-to-income ratio in 20 months
Martin writes “that last point may be the most important. For the average home buyer, month-to-month housing costs are lower than they’ve been at almost any point in the last three years.”
Why Is Housing More Affordable Now?
Lawrence Yun, the chief economist for the National Association of Realtors, states that lower mortgage rates right now are helping to offset higher home prices.
“Assuming you put down 20% on a median-priced home, your monthly mortgage payment would be $1,070 at this time last year. That’s assuming a 4.7% mortgage rate at that time,” he says.
Today, your monthly payment on that same home could be down to $990 — $80 less — even though you would have paid more for the home thanks to rising real estate prices.
Will This Trend Continue?
Yun, and many other economists, believe that mortgage rates will likely remain attractive through 2020.
“But then they will rise, which will knock off many buyers from the pool of eligible purchasers,” predicts Yun.
Should You Act Now?
Please do reach out to me so we can analyze your current situation to see if a home purchase might be in your best interest. Based on the data, now is really the time to get started…and it would be my pleasure to help you.