It's hard to escape all the bad news about the real estate market… it seems like nearly everyone I encounter asks me about it. News this week talked about sellers slashing prices (52.4% of Twin Cities listings) and more pending sales the first week of February than the last week of August.
Of course we are now paying the price for the shift in buying patterns caused by the federal tax credit, but what the news doesn't talk about is just how affordable houses are these days compared to a few years ago. Yes, these are challenging times for sellers… but a time of great opportunity for buyers.
According to the last statistics from the Minneapolis Area Association of Realtors, the Housing Affordability Index (HAF) is even higher than it was last year at this time. The chart above shows the index is 5.1% above 2009 and 42.4% ahead of 2008… and going back further it is 58.9% above 2006!
The index takes into account not just prices, but also interest rates and income, and as the HAF increases monthly payments go down for a median priced home. For example…
- Plymouth median sale price was $293,500 in 2006 and $252,990 in July 2010
- Mortgage rate was 6.6% in 2006 and 4.2% in 2010
- Monthly payment for the median priced home with 20% down was $1,500 in 2006 and $990 in 2010… that's 44% lower!
Inventory is growing, giving buyers more choices… mortgage rates have been holding at record lows for longer than anyone imagined, hard to say what the future holds but they have crept up a bit… sellers have been slashing prices… what a great time to be a buyer!
Sharlene Hensrud, RE/MAX Results - Email - HomesMSP.com
