Homeownership Myths BustedEven in today’s modern world, it can be tough to sort out the homebuying facts from the fiction. We’re setting the record straight for some of the most common
HOUSEBUYING POWER AT NEARHISTORIC LEVELS
Dated: July 16 2018
We keep hearing that home affordability is approaching crisis levels. While this may be true in a few metros across the country, housing affordability is not a challenge in the clear majority of the country. In their most recent Real House Price Index, First American reported that consumer “house-buying power” is at “near-historic levels.”
Their index is based on three components:
Median Household Income
Mortgage Interest Rates
The report explains:
“Changing incomes and interest rates either increase or decrease consumer house-buying power or affordability. When incomes rise and/or mortgage rates fall, consumer house-buying power increases.”
Combining these three crucial pieces of the home purchasing process, First American created an index delineating the actual home-buying power that consumers have had dating back to 1991.
Here is a graph comparing First American’s consumer house-buying power (blue area) to the actual median home price that year from the National Association of Realtors (yellow line).
Consumer house-buyer power has been greater than the actual price of a home since 1991. And, the spread is larger over the last decade.
Even though home prices are increasing rapidly and are now close to the values last seen a decade ago, the actual affordability of a home is much better now. As Chief Economist Mark Fleming explains in the report:
Since its inception in 1995, Patrick Team Properties has exemplified a profound commitment to its clients by providing the highest standard of service, integrity and work ethic in the field. Patri....
Latest Blog Posts
5 Reasons Today’s Housing Market Is Anything but NormalThere are many headlines out there that claim we’re reverting to a more normal real estate market. That would indicate the housing market
What Is the Strongest Tailwind to Today’s Recovering Economy?Last year started off with a bang. Unemployment was under 4%, forecasters were giddy with their projections for the economy, and