Some Highlights:With interest rates still around 4.5%, now is a great time to look back at where rates have been over the last 40 years.Rates are projected to climb to 5.1% by this time next year
Homes Are More Affordable Today Than 1985 To 2000
Rising home prices have many concerned that the average family will no longer be able to afford the most precious piece of the American Dream – their own home.
However, it is not just the price of a home that determines its affordability. The monthly cost of a home is determined by the price and the interest rate on the mortgage used to purchase it.
Today, mortgage interest rates stand at about 4.5%. The average annual mortgage interest rate from 1985 to 2000 was almost double that number, at 8.92%. When comparing affordability of homeownership over the decades, we must also realize that incomes have increased.
This is why most indexes use the percentage of median income required to make monthly mortgage payments on a typical home as the point of comparison.
Zillow recently released a report comparing home affordability over the decades using this formula. The report revealed that, though homes are less affordable this year than last year, they are more affordable today (17.1%) than they were between 1985-2000 (21%). Additionally, homes are more affordable now than at the peak of the housing bubble in 2006 (25.4%). Here is a chart of these findings:
What will happen when mortgage interest rates rise?
Best Priced Properties Team - Russell and Melissa Banki REALTORS®- Hite Properties Certified Negotiation Experts (CNE) Accredited Luxury Home Specialist (ALHS) Certified Home Selling Advisors (CHSA) Certified Home Buying Advisors (CHBA) office 936-270-8090 Certified Expert Home Selling and Buying Advisors. Ask us about our Smart Home Buying and Selling Strategy. CALL OR TEXT US. cell: 713-480-0889 or 936-445-0216. As local real estate experts in The Woodlands, Spring, Shenandoah, Magnolia, Montgomery, Conroe and Greater North Houston/Houston Metro areas we can save you valuable time & money! Contact us today. It would be our pleasure to help you with all your buying, selling or investment needs. We believe our clients should feel confident and benefit from selling or purchasing real estate.
REALTOR®, GRI - Hite Properties Best Priced Properties Team - The Woodlands TX Office: 936-270-8090 ext 109 Cell: 936-445-0216 Efax: 936-270-8774 Client First! We believe our clients should ....
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