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Home > rapid city south dakota homes > Truth About Housing Affordability For First Time Home Buyers

Truth About Housing Affordability For First Time Home Buyers

Truth About Housing Affordability For First Time Home Buyers

From a purely economic perspective, this is one of the best times in American history to buy a home. Black Night Financial Services discusses this in their most recent Monthly Mortgage Monitor.

Here are two of the report’s revelations:

  1. The average U.S. home value increased by $13,500 from last year, but low interest rates have kept the monthly principal & interest payment needed to purchase a median-priced home almost equal to one year ago.
  2. Home affordability still remains favorable compared to long-term historic norms.

The report explains:

“Even though the value of the average home in the U.S. increased by about $13,500 over the last year, thanks to declining interest rates it actually costs almost exactly the same in principal and interest each month to purchase as it did this time last year.

Even taking into account the fact that affordability can vary – sometimes significantly – across the country based upon the different rates of home price appreciation we’re seeing, that’s a pretty incredible balancing act between interest rates and home prices at the national level…

Right now, it takes 20 percent of the median monthly income to cover monthly payments on the median-priced home, which is well below historical norms.”

Truth About Housing Affordability For First Time Home Buyers

However, the report warns that affordability will be dramatically impacted by an increase in mortgage rates.

“A half-point increase in interest rates would be equivalent to a $17,000 jump in the average home price, and bring that ratio to 21.5 percent. This increase is still below historical norms, but puts more pressure on homebuyers.”

Bottom Line

If you are ready and willing to purchase a home of your own, let’s get together to find out if you are able to. Now is a great time to jump in, especially if you are a first time home buyer. As you can see from this post, that will change with an increase in mortgage interest rates. No one can really predict what will happen, but with historically low rates right now, it seems there is only one place to go and that is up, which means, less home or a higher cost for you as a first time home buyer.

Truth About Housing Affordability For First Time Home Buyers

Let’s get together and talk about where you are and if buying a home is right for you, no cost and no pressure. Call today 605-858-0775

Talk soon,

Jim

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Jim Whittaker

Rapid City Real Estate Agent

Jim-Whittaker

Broker Associate

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