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According to Jim Weichert, Homebuyers Should Take Advantage of Record Housing Affordability

According to Jim Weichert, Homebuyers Should Take Advantage of Record Housing Affordability

Weichert Realtors Press Release

According To Jim Weichert, Homebuyers Should Take Advantage Of Record Housing Affordability

You’ve likely heard it before: Low interest rates and attractive home prices make it a good time to purchase a home. What you may not know is that despite several years of favorable housing conditions, affordability has arrived at an entirely new level. The National Association of Realtors (NAR) recently reported that its Housing Affordability Index reached a record high of 206.1 in January. This was the first month since the index began in 1970 that it has hit or surpassed 200.

“This means that houses are more affordable now than at any point in the last 42 years,” said Jim Weichert, president and founder of Weichert, Realtors. “To put it in perspective, let’s look at NAR’s methodology. A Housing Affordability Index of 100 represents a median-income-earning family’s ability to exactly afford a median-priced, existing single-family home. With the index at 200, that means a family earning the median family income has 200 percent – or twice – the income necessary to qualify for a conventional loan covering 80 percent of a median-priced existing single-family home.”

When it comes to determining housing affordability, no two factors play a bigger role than home prices and interest rates. Right now, these conditions are highly favorable for buyers.

Rates for 30-year fixed-rate mortgages have been historically low for the last four years, even remaining in the 4 percent range for the better part of the last year. That means today’s buyers can borrow money on more affordable terms than virtually any other time in the past.

At the same time, home prices have retreated as a result of the market correction that has taken place over the past few years. Together, this combination of low interest rates and attractive home prices allows consumers who buy today the opportunity to get much more home for their money.

Just as encouraging for those thinking about purchasing a home shortly is the fact that home prices appear to be stabilizing or even rising. According to CoreLogic, a leading provider of real estate data, non-distressed home sale prices, which represent two-thirds of all sales, have appreciated by just over 1 percent since the beginning of the year.

While home price stabilization is good news for potential buyers in terms of the likely return on their investment, it should also signal some sense of urgency. The same can be said for today’s historically low interest rates. The reality is that there is not much more room for rates to go down, and that means they are likely to go up, negatively impacting housing affordability when it happens.

Added Weichert, “Those who have the means and the desire to buy now but don’t may miss out on the unprecedented opportunity present in today’s real estate market.”

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