When most folks search for a new home, they naturally start by looking at prices. It’s important to consider what else impacts the purchase before making a decision, though. It’s not just the price that matters, but the overall cost of owning the home.
Today this cost is largely impacted by low mortgage rates. Low rates are making homes more affordable now than at any time since 2016. These rates are offsetting rising home prices because it’s less expensive to borrow money. In essence, purchasing a home while rates are this low may save you significantly over the life of your mortgage loan.
What are the experts saying about home affordability? NAR Chief Economist Lawrence Yun says, “Although housing prices have consistently moved higher, when the favorable mortgage rates are factored in, an overall home purchase was more affordable in 2020’s second quarter compared to one year ago.”
According to Mortgage News Daily, “Those shopping for a home can afford 10% more home than they could have one year ago while keeping their monthly payment unchanged. This translates into nearly $32,000 more buying power when looking at a median-priced home.”
So again, when purchasing a home, think about the overall cost of ownership—not just the price. Homes on your wish list may be more affordable than you think.
If you’d like to discuss how affordability plays a role in our local market and your long-term homeownership goals, give me a call. If you have any other real estate questions, feel free to reach out to me as well. I’d love to speak with you.