Remember the housing bust that started back in 2008?
Lenders–trying to boost “the American dream” for everyone–relaxed their strict lending standards. Too many people and businesses took on real estate loans they couldn’t afford. The bubble burst. The stock market crashed.
It didn’t take long for people to lose their homes in the aftermath. Foreclosed properties flooded the market. And there weren’t enough buyers to purchase them. Home prices tumbled so buying a home got much more affordable.
Now you can see from the green bar on this National Association of Realtor’s chart that median-priced homes are more affordable compared to median incomes. In fact, more affordable than they’ve been since the crash when properties were sold at discounts not seen before in the housing market.
But today’s homes are affordable for a very different reason.
What makes a home affordable?
There are three main elements that go into determining how affordable homes are for buyers:
- Current mortgage rates
- Mortgage payments as a percentage of an owner’s income
- Current home prices
So why are homes so affordable today?
Although all three factors add up to the final numbers, the one that’s playing the largest part today is historically low mortgage rates. Based on this main factor, we can see that it’s more affordable to buy a home today than at any time in the last seven years.
No one can guarantee affordability won’t stay high. Or go even higher if more people lose their jobs and foreclose on their homes. But for today, conditions are favorable.
So where and when do I start?
You’ll want to do your research. Ask a local real estate professional their thoughts on the market today. And if you have another house you need to sell first, it’s not a bad idea to jump in on those little fix-it projects this very weekend.
If you’re considering purchasing your first house or moving up to that dream home, remember affordability when it comes to the cost of your home. Buying while mortgage rates are low can save you quite a bit of money over the life of your home loan.
If you do choose to buy, you’ll need a title on your new home. When it comes time to close on your sale, keep Clean Title, LLC, in mind. We’re researching the past to protect your future!
Don’t miss our popular Title FAQs for tips that will give you the peace of mind only a clean title can. See us on our Facebook page and check out details of our services on our website. Or call 985-277-5095 to speak to one of our title professionals today!