The #1 Misconception in the Homebuying Process
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“A year ago, a combination of a government shutdown, stock market slump and mortgage rate spike caused a long-anticipated inventory rise. That supposed boom turned out to be a short-lived mirage as buyers came back into the market and more than erased the inventory gains. As a natural reaction, the recent slowdown in home values looks like it’s set to reverse back.”
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- 21 states appreciating 5% or more
- 26 states appreciating between 3-5%
- Only 3 states appreciating less than 3%
Many believe when real estate values are increasing, owning a home becomes less affordable. That misconception is not necessarily true.
In most cases, homes are purchased with a mortgage. The current mortgage rate is a major component of the affordability equation. Mortgage rates have fallen by almost a full percentage point since this time last year.
Another major piece of the equation is a buyer’s income. The median family income has risen by 5% over the last year, contributing to the affordability factor.
Black Knight, in their latest Mortgage Monitor, addressed this exact issue:
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“Despite the average home price increasing by nearly $13,000 from just over a year ago, the monthly mortgage payment required to buy that same home has actually dropped by 10% over that same span due to falling interest rates…
Put another way, prospective homebuyers can now purchase a $48K more expensive home than a year ago while still paying the same in principal and interest, a 16% increase in buying power.” |
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If you’re thinking about purchasing a home, realize that homes are still affordable even though prices are increasing. As the Black Knight report concluded:
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“Even with home price growth accelerating, today’s low-interest-rate environment has made home affordability the best it’s been since early 2018.”
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"Real Estate is not just a job for me, it's about making a difference in the lives of others"
Troy Erickson Realtor
Call/Text: (602)295-6807
[email protected]
Facebook.com/TroyEricksonRealtor