Well this ceiling isn’t boring! Yay or Nay?
Dispelling the Myth About Home Affordability
We have all seen the headlines that report that buying a home is less affordable today than it was at any other time in the last ten years, and those headlines are accurate. But, have you ever wondered why the headlines don’t say the last 25 years, the last 20 years, or even the last 11 years?
The reason is that homes were less affordable 25, 20, or even 11 years ago than they are today.
Obviously, buying a home is more expensive now than during the ten years immediately following one of the worst housing crashes in American history.
Over the past decade, the market was flooded with distressed properties (foreclosures and short sales) that were selling at 10-50% discounts. There were so many distressed properties that the prices of non-distressed properties in the same neighborhoods were lowered and mortgage rates were kept low to help the economy.
Low Prices + Low Mortgage Rates = High Affordability
Prices have since recovered and mortgage rates have increased as the economy has gained strength. This has and will continue to impact housing affordability moving forward.
However, let’s give affordability some historical context. The National Association of Realtors (NAR) issues their Affordability Index each month. According to NAR:
“The Monthly Housing Affordability 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 monthly price and income data.”
NAR’s current index stands at 138.8. The index had been higher each of the last ten years, peaking at 197 in 2012 (the higher the index the more affordable houses are).
But, the average index between 1990 and 2007 was just 123 and there were no years with an index above 133. That means that homes are more affordable today than at any time during the eighteen years between 1990 and 2007.
Bottom Line
With home prices continuing to appreciate and mortgage rates increasing, home affordability will likely continue to slide. However, this does not mean that buying a house is not an attainable goal in most markets as it is less expensive today than during the eighteen-year stretch immediately preceding the housing bubble and crash.
October
Who doesn’t love Fall? Make it a happy one!
Blue for You
One more day for a little fun with blue…I like the different colors (all blue) and the textures that make this room so unique. I also love the corner spot full of white pitchers…a lot of people have this awkward spot in their homes. So creative.
Getting Organized
Organizing your home can sometimes seem like a time-intensive endeavor. Breaking down projects into two-minute tasks every day could help to make clearing clutter more manageable and easily attainable.
Simple tips like these can create a happier, healthier and more valuable home. Thank you for thinking of me for all of your real estate needs, and be sure to share my contact information with anyone you know of looking to buy, sell or invest in a home.
How Does the Supply of Homes for Sale Impact Buyer Demand?
The price of any item is determined by the supply of that item, as well as the market’s demand for it. The National Association of REALTORS (NAR) surveys “over 50,000 real estate practitioners about their expectations for home sales, prices and market conditions” for their monthly REALTORS Confidence Index.
Their latest edition sheds some light on the relationship between seller traffic (supply) and buyer traffic (demand).
Buyer Demand
The map below was created after asking the question: “How would you rate buyer traffic in your area?”
The darker the blue, the stronger the demand for homes is in that area. The survey showed that in 38 out of 50 states buyer demand was slightly lower than this time last year but remains strong. Only six states had a ‘stable’ demand level.
Seller Supply
The index also asked: “How would you rate seller traffic in your area?”
As you can see from the map below, 23 states reported ‘weak’ seller traffic, 22 states and Washington D.C. reported ‘stable’ seller traffic, and 5 states reported ‘strong’ seller traffic. This means there are far fewer homes on the market than what is needed to satisfy the buyers who are out looking for homes.
Bottom Line
Looking at the maps above, it is not hard to see why prices are appreciating in many areas of the country. Until the supply of homes for sale starts to meet buyer demand, prices will continue to increase. If you are debating listing your home for sale, let’s get together so I can help you capitalize on the demand in the market now!
Transform Your Garage
I am totally doing this!
https://www.homegoods.com/blog/2018/08/24/transforming-an-ordinary-garage-into-an-extraordinary-one/
