Home affordability is a hot topic, with many homebuyers facing challenges in the current market. While higher mortgage rates have been a concern, affordability is determined by several factors, including mortgage rates, home prices, and wages. Here’s what you need to know about each of these factors and how they’re affecting home affordability today.
- Mortgage Rates While mortgage rates have risen since the record-low seen during the pandemic, they’ve remained relatively stable at 6%-7% over the past eight months. However, even a small increase in mortgage rates can impact your purchasing power. It’s crucial to stay informed about market changes and seek expert advice from real estate professionals.
- Home Prices Home prices surged during the pandemic due to high buyer demand and low inventory. However, today’s higher mortgage rates have slowed down price appreciation. Still, the rate of price appreciation varies by market. Some areas are seeing slight declines, while others continue to experience increases.
- Wages The most positive factor in affordability right now is rising wages. Higher wages reduce the percentage of your income needed to pay your mortgage, making homeownership more affordable. According to data from the Bureau of Labor Statistics, wages have been growing steadily.
Overall, home affordability is determined by a combination of rates, prices, and wages. Understanding how these factors work together is essential to making informed decisions about buying a home. To learn more about how these factors are impacting affordability in your local market, reach out to a trusted real estate agent.
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