What is going on lately in the Real Estate Industry?
Check out this month’s update from the desk of
Laura Piatt, Ticor Title Mid-Valley Sales Manager
Who’s tired of hearing about the wood?
I for one, am tired of talking about it. In short, it will continue to increase as will other building supplies as will home prices. PERIOD.
There are multiple reasons WHY! I suggest view this video by RE-Source. He gets it!
And even with all these increased costs, would you believe buying a home is STILL affordable?
There are three main factors that go into determining how affordable homes are for buyers:
- Mortgage Rates
- Mortgage Payments as a Percentage of Income
- Home Prices
The National Association of Realtors (NAR) produces a Housing Affordability Index. It 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:
The blue bar represents today’s affordability. We can see that homes are more affordable now than they’ve 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 for almost one hundred years.
Bottom Line
If you feel ready to buy, purchasing a home this summer may save you a significant amount of money over time based on historical affordability trends.
