Is The Sky Falling for Home Affordability? Look BEHIND The Numbers For A Brighter View
By: Jo Garner, Mortgage Loan Officer NMLS #757308 Sierra Pacific Mortgage
46 Timber Creek Cordova, TN 38018 (901) 482-0354 [email protected] Subscribe to get Jo Garner's weekly podcast from her iHeart Radio show Real Estate Mortgage Shoppe. Subscribe at www.JoGarner.com
More realtors around the country have been voicing concern about what appears to be the price of homes exceeding affordability because of the 15% increase year-over-year on the median home price.
The biggest driver of home prices is the principle of supply and demand.
Driving high demand and causing a shortage of homes available for sale, is the lowest mortgage rates we have seen in history.
Chicken Little is not a good one to ask, “Is the sky falling on home affordability?” At least for now, the sky is NOT falling on home affordability.
The media is reporting home sales are up 20% year over year and median home prices across the nation have risen about 15% year-over-year which, at first glance, looks like homes are becoming less affordable.
But, median home prices do not measure home value appreciation. The spectrum for calculating median home prices was weighted heavily with a higher number of upper-priced homes selling as compared to lower priced homes, making affordability look more challenged than it actually is.
So, the sky is NOT falling when it comes to affordability of homes. The appreciation on the value of homes is only up about 7% year over year. Incomes are up about 5.6%. Since most people keep their monthly mortgage payment at around 20% of their income, incomes would only have to go up 1% if prices increased another 5%.
The two biggest questions homebuyers ask themselves when they are deciding to buy or not a buy a home are these:
1. How much will it cost per month?
2. How much do I have to pay down?
The big advantage for Homebuyers is they are getting to lock in a fixed mortgage interest rate for 10, 15 , 20 or even 30 years while rates are lowest they have been in our history.
Connect with me at www.JoGarner.com or call me at (901) 482-0354 to explore YOUR mortgage opportunities. Then YOU can answer the question, “Is it affordable? Is it even more affordable than I thought?”