Over the last couple of months, I have noticed that purchasing a home in our area requires less of a buyer’s monthly paycheck.
The National Association of Realtors has found a similar trend as their February 2019 Housing Affordability Index showed that the “percentage of income needed” to pay the typical mortgage has decreased the last three months:
- November 2019 – 17.3%
- December 2019 – 16.9%
- January 2019 – 16.2%
- February 2019 – 15.9%
Additionally, CoreLogic recently reported that their National Rent Index was up 36% in December 2018 compared with December 2005, while the typical mortgage payment was down 4% over that period.
Now, it makes sense that rents have risen. But did mortgage payments really decrease? As CoreLogic explains, “It’s mainly because mortgage rates back in December 2005 were significantly higher, averaging 6.3% for a fixed-rate 30-year loan, compared with 4.6% in December 2018.
The national median sale price in December 2005 - $190,000 – was lower than the $220,305 median in December 2018, but because of higher mortgage rates in 2005 the typical monthly mortgage payment was slightly higher then - $941 – compared with $904 in December 2018.”
What does this all mean to our current housing market? I think that First American said it best in one of their recent blog posts, “The mortgage rate-driven affordability surge has arrived just in time. Rising affordability has already benefited home buyers in our area and, if the lower rate environment persists, we’re in for a great spring home buying season.”
If you would like to talk more about the current real estate market in our area, feel free to reach out to me.