There are several factors that influence the cost of a home. Two of the major ones are:
- The price of the home
- The mortgage rate at which a buyer can borrow the funds necessary to purchase the home
The blue bar above represents today’s affordability in comparison to prior years. Speaking with George Doyle from The Local Team at 716 Realty Group he states,
“Interestingly enough, homes are more affordable now rather than pre-2008, even though we have seen an increase in the dollar figure they are being sold for. ”
Why are homes still affordable today?
The number one factor impacting today’s home buying affordability is record-low mortgage rates. There’s no doubt that prices are on the rise. However, mortgage rates have fallen dramatically. Last week, Freddie Mac announced that the average interest rate for a 30-year fixed-rate mortgage was 2.72%. Last year at this time, the average rate was 3.68%.
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.
“The housing market is still in a good place in terms of affordability. ” according to Doyle. “That and mortgage rates being extremely favorable right now make for a great time to contact your local real estate professional and start your search. ”
**graph from Keeping Matters Current**