• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Discover the East Bay

Discover the East Bay

with Noelle Cummings, REALTOR®

  • Home
  • Buyers
    • Advanced Search
    • Map Search
    • Mortgage Calculator
    • Get Home Search Updates
    • User Login
  • Sellers
    • Get Home Search Updates
    • User Login
  • Communities
  • The Key to Your Home Blog
    • Buyer Tips
    • Seller Tips
    • Homeowner Tips
    • Market Updates
    • Real Estate News
  • Contact Noelle

Taking Advantage of Homebuying Affordability in Today’s Market

08/24/2020 by Noelle Cummings

Everyone is ready to buy a home at different times in their lives, and despite the health crisis, today is no exception. Understanding how affordability works and the main market factors that impact it may help those who are ready to buy a home narrow down their optimal window of time to make a purchase.

There are three main factors that go into determining how affordable homes are for buyers:

  1. Mortgage Rates
  2. Mortgage Payments as a Percentage of Income
  3. Home Prices

The National Association of Realtors (NAR), produces a Housing Affordability Index, which takes these three factors into account and determines an overall affordability score for housing. According to NAR, the index:

…measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data.”

Their methodology states:

To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.”

Taking Advantage of Homebuying Affordability in Today’s Market | MyKCM

So, the higher the index, the more affordable it is to purchase a home. Here’s a graph of the index going back to 1990:The green bar represents today’s affordability. We can see that homes are more affordable now than they have been at any point since the housing crash when distressed properties (foreclosures and short sales) dominated the market. Those properties were sold at large discounts not seen before in the housing market.

Why are homes so affordable today?

Although there are three factors that drive the overall equation, the one that’s playing the largest part in today’s homebuying affordability is historically low mortgage rates. Based on this primary factor, we can see that it is more affordable to buy a home today than at any time in the last seven years.

If you’re considering purchasing your first home or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home. With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.

Bottom Line

If you feel ready to buy, purchasing a home this season may save you significantly over time based on historic affordability trends. Let’s connect today to determine if now is the right time for you to make your move.

  • Share on Twitter
  • Share on Facebook
  • Share on Pinterest
  • Share on LinkedIn
  • Share via Email

Filed Under: Buyer Tips, Real Estate News

About Noelle Cummings

Raised in Walnut Creek, Noelle Cummings understands and appreciates the many unique benefits of living in the Bay Area - with its unmatched beauty, culture, shopping, and marvelous restaurants!

Primary Sidebar

CONNECT WITH ME:

  • Facebook
  • Instagram
  • LinkedIn
  • YouTube

Monthly E-Newsletter Signup

Categories

  • Buyer Tips
  • Homeowner Tips
  • Market Updates
  • Real Estate News
  • Seller Tips

Footer

Noelle Cummings
REALTOR® | Cal DRE #01333246

Connect with me on:

  • Facebook
  • Instagram
  • LinkedIn
  • Pinterest
  • YouTube

Contact Noelle

Copyright © 2021 · Agent Focused Pro by Winning Agent · Log in

WINDERMERE BAY AREA PROPERTIES

1212 Broadway Plaza, Suite 2100 | Walnut Creek, CA 94596

925-256-1600

CA DRE# 01815347

Privacy Policy