Homes are more affordable right now that what they have been in years

Today, home prices are gaining value. When we hear that prices are increasing, it is normal to think that the house will cost more as the trend continues. However, the way the housing market is positioning itself today, low mortgage rates are making homes more affordable, even as prices go up. Here is why. According to Black Knight's Mortgage Monitor Report: "While home prices have risen for 97 consecutive months, July's record low mortgage rates have made buying a median-priced home the most affordable it has been since 2016." How is that possible? Black Knight goes on to explain: “Until mid-July, 19.8% of average monthly income was required to make the mortgage payment on the purchase of a median-priced home, assuming a 20% down payment and a 30-year mortgage. That was more than 5% below the 25% average from 1995 to 2003. This means that a monthly payment of $ 1,071 is currently required to purchase a median-priced home, which is 6% down from the same season last year, even though the median home increased in value by more than $ 12,000. during the same period. In fact, purchasing power is now up 10% year-over-year, which means that the average home buyer can pay almost $ 32,000 more than they could the same season last year, keeping their monthly payment the same. " This is great news for the many shoppers who were unable to buy last year, or early spring due to the slowdown in the pandemic. By waiting a little longer, they can now get 10% more home than they could have last year, keeping their monthly mortgage payment unchanged. With mortgage rates hitting lows eight times this year, it's now less expensive to borrow money, making homes significantly more affordable over the life of your loan. Mark Fleming, Senior Economist at First American, shares what low mortgage rates mean for affordability: “In July, the purchasing power of the home received a big boost as the 30-year fixed mortgage rate made history by falling below three percent. That drop in the mortgage rate from 3.23 percent in May to 2.98 percent in July increased the purchasing power of the home by almost $ 15,000. " If you are considering moving, now is a great time to take advantage of the affordability that comes with such low mortgage rates. Whether you're thinking of buying your first home or moving to a new one and securing a significantly lower mortgage rate than you can have on your current home, let's get in touch today to determine the next steps in the process.