47% of New Buyers Surprised by How Affordable Homes Are Today!!

Dated: February 13 2021

Views: 463

47% of New Buyers Surprised by How Affordable Homes Are Today

47% of New Buyers Surprised by How Affordable Homes Are Today | MyKCM

Headlines matter. Right now, it’s hard to read about real estate without seeing a headline that suggests homes have become unaffordable for most Americans. In reality, there’s hard evidence that shows how owning a home is more affordable than renting in most parts of the country, as record-low interest rates are keeping monthly mortgage payments about 23% lower than the typical payment of 20 years ago. Despite the facts, misleading headlines persist, and they impact how hopeful homebuyers perceive the market.

In a recent survey by realtor.com, home shoppers indicated they were surprised by what they could actually afford when buying their first home. In fact, 47% discovered their budget was larger than they expected. George Ratiu, Senior Economist at realtor.com, explains:

"For first-time buyers, especially, the drop in the 30-year mortgage rate…has provided unexpected leverage. Lower rates allowed many buyers to stretch and buy more expensive homes while keeping their monthly budget the same."

So why do these negative headlines that cast doubt on affordability continue to exist?

Most analysts only look at two of the three elements that make up the affordability equation: price and income. It’s true that incomes haven’t kept up with the price of houses. However, affordability is about the cost of the home, not just the price. For that reason, mortgage rates, the third element of the affordability equation, are important to consider.

For example, here’s the typical mortgage payment for assorted dates going back to 2000, as calculated by CoreLogic:47% of New Buyers Surprised by How Affordable Homes Are Today | MyKCMOutside of the housing crash (when short sales and foreclosures drove prices down), it’s more affordable to buy a home today when you consider all three elements of the affordability equation: price, income, and mortgage rate.

Bottom Line

Whether you’re a first-time buyer or a move-up buyer, don’t let the headlines scare you away from your dream of homeownership. Instead, connect with mortgage and real estate professionals to determine what you can afford and what’s available at that price. Like almost half of the buyers in the survey, you may be pleasantly surprised.

Blog author image

Ron Latronico

Buying or selling a home is more than just a transaction: it’s a life-changing experience. That’s why I’m dedicated to providing exceptional, personalized service for all of my clients. I take g....

Latest Blog Posts

Hope

Hope Is on the Horizon for Today’s Housing ShortageThe major challenge in today’s housing market is that there are more buyers looking to purchase than there are homes available to buy.

Read More

Right Expert

The Right Expert Will Guide You Through This Unprecedented MarketIn a normal market, it’s good to have an experienced guide coaching you through the process of buying or selling a home. That

Read More

Listing Prices Are Like an Auction’s Reserve Price

In Today’s Market, Listing Prices Are Like an Auction’s Reserve PriceFor generations, the process of buying and selling a home never really changed. A homeowner would try to estimate the

Read More

Dreaming of a Bigger Home? Why Not Buy It This Year??

Dreaming of a Bigger Home? Why Not Buy It This Year?Are you clamoring for extra rooms or a more functional floorplan in your house? Maybe it’s time to make a move. If you’ll be able to

Read More