It is Not Just About the Price of the Home

Dated: September 6 2020

Views: 117

It’s Not Just About the Price of the Home

It’s Not Just About the Price of the Home | MyKCM

When most of us begin searching for a home, we naturally start by looking at the price. It’s important, however, to closely consider what else impacts the purchase. It’s not just the price of the house that matters, but the overall cost in the long run. Today, that’s largely impacted by low mortgage rates. Low rates are actually making homes more affordable now than at any time since 2016, and here’s why.

Today’s low rates are off-setting rising home prices because it’s less expensive to borrow money. In essence, purchasing a home while mortgage rates are this low may save you significantly over the life of your home loan.

Taking a look at the graph below with data sourced from the National Association of Realtors (NAR), the higher the bars rise, the more affordable homes are. The orange bars represent the period of time when homes were most affordable, but that’s also reflective of when the housing bubble burst. At that time, distressed properties, like foreclosures and short sales, dominated the market. That’s a drastically different environment than what we have in the housing market now.

The green bar represents today’s market. It shows that homes truly are more affordable than they have been in years, and much more so than they were in the normal market that led up to the housing crash. Low mortgage rates are a big differentiator driving this affordability.It’s Not Just About the Price of the Home | MyKCM

What are the experts saying about affordability?

Experts agree that this unique moment in time is making homes incredibly affordable for buyers.

Lawrence Yun, Chief Economist, NAR:

“Although housing prices have consistently moved higher, when the favorable mortgage rates are factored in, an overall home purchase was more affordable in 2020’s second quarter compared to one year ago.”

Bill Banfield, EVP of Capital Markets, Quicken Loans:

“No matter what you’re looking for, this is a great time to buy since the current low interest rates can stretch your spending power.

Mortgage News Daily:

“Those shopping for a home can afford 10 percent more home than they could have one year ago while keeping their monthly payment unchanged. This translates into nearly $32,000 more buying power. 

Forbes:

Homeowners are the clear winners. Low mortgage rates mean the cost of owning is at historically low levels and who gains all the benefits of strong house price appreciation? Homeowners.”

Bottom Line

When purchasing a home, it’s important to think about the overall cost, not just the price of the house. Homes on your wish list may be more affordable today than you think. Let’s connect to discuss how affordability plays a role in our local market, and your long-term homeownership goals.

Blog author image

KELLY RICKARD

I am a native Texan and real estate agent for Abby Realty in Spring, TX. I was born and raised in the Houston area; therefore, I know the city and surrounding areas well. Whether you are buying, sell....

Latest Blog Posts

Options for First-Time Homebuyers [INFOGRAPHIC]

Options for First-Time Homebuyers [INFOGRAPHIC]Some HighlightsWith a housing market this competitive, sometimes you have to think outside the box.Work with your trusted real estate advisors to

Read More

Are More Young People Are Buying Homes?

More Young People Are Buying HomesThere’s a common misconception that younger generations aren’t interested in homeownership. Many people point to the fact that millennials put off

Read More

What Does it Mean to be in a Sellers’ Market?

What Does Being in a Sellers’ Market Mean?Whether or not you’ve been following the real estate industry lately, there’s a good chance you’ve heard we’re in a serious

Read More

Real Estate: It is Still a Lack of Supply, Not a Lack of Demand

Real Estate: It’s Still a Lack of Supply, Not a Lack of DemandOne of the major questions real estate experts are asking today is whether prospective homebuyers still believe purchasing a home

Read More