The Truth About Housing Affordability | MyKCM

Post from my Keeping Current Matters blog…

From a purely economic perspective, this is one of the best times in American history to buy a home. Black Night Financial Services discusses this in their most recent Monthly Mortgage Monitor.

Here are two of the report’s revelations:

  1. The average U.S. home value increased by $13,500 from last year, but low interest rates have kept the monthly principal & interest payment needed to purchase a median-priced home almost equal to one year ago.
  2. Home affordability still remains favorable compared to long-term historic norms.

The report explains:

“Even though the value of the average home in the U.S. increased by about $13,500 over the last year, thanks to declining interest rates it actually costs almost exactly the same in principal and interest each month to purchase as it did this time last year.

Even taking into account the fact that affordability can vary – sometimes significantly – across the country based upon the different rates of home price appreciation we’re seeing, that’s a pretty incredible balancing act between interest rates and home prices at the national level…

Right now, it takes 20 percent of the median monthly income to cover monthly payments on the median-priced home, which is well below historical norms.”

However, the report warns that affordability will be dramatically impacted by an increase in mortgage rates.

“A half-point increase in interest rates would be equivalent to a $17,000 jump in the average home price, and bring that ratio to 21.5 percent. This increase is still below historical norms, but puts more pressure on homebuyers.”

Bottom Line

If you are ready and willing to purchase a home of your own, let's get together to find out if you are able to. Now is a great time to jump in.

Sharlene Hensrud, RE/MAX Results -  Twin Cities Buyer's Agent

The HomesMSP Team - SharleneJohnAngela Minneapolis-St. Paul Realtors

RELATED POSTS

About Sharlene Hensrud

I love what I do! Highly insightful, analytical and creative, there is nothing I love more than helping you find the right solution for your real estate transition. My mission is to serve my clients with honesty and integrity, exceeding their expectations in service and support… and to help others by donating a portion of every transaction to Habitat for Humanity.

Related Posts

Insanely Clever Remodeling and Storage Ideas… 43 of them!

I couldn't resist sharing Sarah Susanska's link to BuzzFeed's 43 Insanely Cool Remodeling Ideas For Your Home. It includes some very clever ideas for using leftover spaces, practical ideas for everyday living, and some pretty amazing spaces. Sharlene Hensrud – Email– Twin Cities Realtor HomesMSP Team with RE/MAX Results–Sharlene, John, Angela  RELATED POSTS Clever built-in storage ideas 9 Essential.

Read More

9 tips to help you deal with multiple offers

There has been a shortage of homes for sale all year and multiple offers have become the norm. As I experienced my day frittered away by putting together a multiple offer I took that as a sign to share some tips again… multiple offers aren’t going away. The seller isn’t legally obligated to let you.

Read More

Insider’s Guide to the 15 First-Ring Suburbs

There are more than 100 suburbs surrounding the Twin Cities of Minneapolis and St. Paul, but only 15 are first-ring suburbs… cities which touch either Minneapolis or St. Paul. These cities are still close to the city for easy commuting for both business and pleasure, and often have many things in common with the city.

Read More