Judith Sutton ABR CRS IDS PMN ASP IAHSP SRES GREEN
Judy@JudithSutton.com 908 803-0472
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WHAT AFFECTS HOME AFFORDABILITY?
There is more to being able to afford a home than just mortgage rates
To understand home affordability, you need to look at the combination of three important factors: mortgage rates home prices, and wages.
Mortgage Rates
Mortgage rates have come down in recent months, and looking forward, most experts expect them to decline further over the year. An economist at Realtor.com, explains:
“While there could be some fluctuations in the path forward the general expectation is that rates will continue to trend downward as long as the economy continues to see progress on inflation.”
Even a small change in mortgage rates can have a big impact on your purchasing power, making it easier for you to afford the home you want by reducing your monthly mortgage payment.
Home Prices
The second important factor is home prices. After going up at a relatively normal pace last year, they’re expected to continue rising moderately in 2024. That’s because even with inventory projected to grow slightly this year, there still aren’t enough homes for sale for all the people who want to buy them.
“More inventory will be generally offset by more buyers in the market. As a result, it is expected that, overall, the median home price in the U.S. will grow modestly . . .”
Prices aren’t likely to skyrocket like they did during the pandemic, but it also means it’ll probably cost you more to wait. So, if you are ready, willing, and able to buy, and you can find the right home, purchasing before more buyers enter the market and prices rise further might be in your best interest.
Wages
Another positive factor in affordability right now (beginning of 2024 stats) is rising income. Data from the Federal Reserve indicate how wages have grown over time.
* All of the graphs show that income is going up at a higher rate than normal according to the most recent reports.
Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage. That’s because you don’t have to put as much of your paycheck toward your monthly housing cost, (or your savings), of course.
What This Means for You
Affordability in buying a home depends on those three things: mortgage rates, home prices, and wages. The good news is they are all moving in a positive direction for buyers, overall.
If you are thinking about buying a home, it's important to know the main factors impacting affordability are improving. To get the latest updates on each aspect of your major investment, ask me. Clarity is the key! My team and I have all the pertinent information you need to make your informed decision!
Adding value for my clients and loving where we live!
Judy@JudithSutton.com
COLDWELL BANKER...GUIDING PEOPLE HOME SINCE 1906
908 803-0472
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