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    Homeownership: As Affordable As Ever

    by David Brenton’s Team

    Everyone is ready to buy a home at different times in their lives, and despite the health crisis, today is no exception. Understanding how affordability works and the main market factors that impact it may help those who are ready to buy a home narrow down their optimal window of time to make a purchase.

    There are three main factors that go into determining how affordable homes are for buyers:

    1. Mortgage Rates
    2. Mortgage Payments as a Percentage of Income
    3. Home Prices

     

    The National Association of Realtors (NAR), produces a Housing Affordability Index, which takes these three factors into account and determines an overall affordability score for housing. According to NAR, the index:

    “…measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data.”

    So, the higher the index, the more affordable it is to purchase a home. The green bar represents today’s affordability. We can see that homes are more affordable now than they have been at any point since the housing crash when distressed properties (foreclosures and short sales) dominated the market. Those properties were sold at large discounts not seen before in the housing market.

    Why are homes so affordable today?

     

    Although there are three factors that drive the overall equation, the one that’s playing the largest part in today’s homebuying affordability is historically low mortgage rates. Based on this primary factor, we can see that it is more affordable to buy a home today than at any time in the last seven years.

    If you’re considering purchasing your first home or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home. With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.

    Thinking About a Move?

    When you are ready to take the leap toward homeownership, we are here for you. Let’s meet for a no-obligation appointment and discuss your options. You may have more than you think. Let Us Assist You: 317.882.7210

    See other articles like this on our Team Blog and in our Team Newspaper.

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