Home Buying In Todays Market

Dated: September 30 2020

Views: 13

Taking Advantage of Home buying Affordability in Today’s Market


Image title


Everyone is ready to buy a home at different times in their lives, and despite the health crisis, today is no exception. Understanding how affordability works and the main market factors that impact it may help those who are ready to buy a home narrow down their optimal window of time to make a purchase.

There are three main factors that go into determining how affordable homes are for buyers:

  1. Mortgage Rates

  2. Mortgage Payments as a Percentage of Income

  3. Home Prices

The National Association of Realtors (NAR), produces a Housing Affordability Index, which takes these three factors into account and determines an overall affordability score for housing. According to NAR, the index:

“…measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data.”

Their methodology states:

“To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.”

So, the higher the index, the more affordable it is to purchase a home. Here’s a graph of the index going back to 1990:Taking Advantage of Homebuying Affordability in Today’s Market | Keeping Current MattersThe green bar represents today’s affordability. We can see that homes are more affordable now than they have been at any point since the housing crash when distressed properties (foreclosures and short sales) dominated the market. Those properties were sold at large discounts not seen before in the housing market.

Why are homes so affordable today?

Although there are three factors that drive the overall equation, the one that’s playing the largest part in today’s home buying affordability is historically low mortgage rates. Based on this primary factor, we can see that it is more affordable to buy a home today than at any time in the last seven years.

If you’re considering purchasing your first home or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home. With that in mind, 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.

Bottom Line

If you feel ready to buy, purchasing a home this season may save you significantly over time based on historic affordability trends. Reach out to a local real estate professional today to determine if now is the right time for you to make your move.


Image title


Want to Advertise on this Site?

Latest Blog Posts

Oct 17 2020 71841 1

Do You Need to Know More about Forbearance and Mortgage Relief Options?Earlier this year when the nation pressed pause on the economy and unemployment rates jumped up significantly, many homeowners

Read More

35 MoneySaving Household Habits

https://www.houselogic.com/save-money-add-value/save-on-utilities/how-to-save-money-each-month/?cid=eo_em_sse_rcrsse&email-refer

Read More

JUST LISTED For LEASE 11431 Newton Street Houston Texas 77089

$ 1,7003 Beds2 Full Bath1,917 Bldg Sqft.8,357 Lot Sqft.Rental - Single Family DetachedWelcome Home to 11431 Newton! This gorgeous 1 story home has been fully renovated with energy efficient features

Read More

Is Your Neighborhood Safe

Is Your New Neighborhood Safe?How toResearch Your New CommunityFinding the right home for you and your family involves more than the rightnumber of bedrooms and a lovely front yard; the neighborhood

Read More