We had a great lunch bunch today where we discussed the Home Affordability factors that are showing that never in our history has there been a better time to buy homes! That’s right – NEVER! Home affordability takes into account interest rates, home prices and income levels. With interest rates at historic lows and home prices falling or remaining stable, reports show that a family needs only 15% – 16% of their income to purchase a home……..that’s down from approximately 50% just a few years ago.
We need to be sure that the buying public is aware of the truth about mortgage rates as they relate to other economic indicators: in 1989 a loaf of bread was 67 cents, a new car averaged $15,350; average home price was $120,000 with an average payment of $1,053. In 2009, a loaf of bread is up to $2.79; the average new car price has increased to $28,715 and the average price of a home is up to $174,000……but the average monthly payment is DOWN to $934. Mortgage rates in 1989 averaged 10% while in 2009 the average was 5%, and current rates are below 5% in many cases.
This perfect scenario for home buying will change dramatically with even a slight rise in interest rates, so we need to be sure the consumers are informed and inspired to act today. It will be a shame to wait until rates begin to rise to take action!