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 are able to 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 in the near future is the fact the 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.”
For more information about Weichert, Realtors or to find your local office, please visit www.weichert.com.
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About Weichert, Realtors:
Since 1969, Weichert, Realtors has grown from a single office into one of the nation's leading providers of homeownership services by putting its customers first. A family of full-service real estate and financial services companies, Weichert helps customers buy and sell both residential and commercial real estate, and streamlines the delivery of mortgages and home and title insurance. Weichert leverages its customer website, www.weichert.com, one of the most visited real estate websites in the nation, to help families and individuals realize the dream of homeownership through quick and easy access to listing information and the services of its real estate professionals nationwide. For more information, Weichert’s customer service center can be reached at 1-800-USA-SOLD. Weichert franchised offices are independently owned and operated.