Buying a home can be a life-changing decision and one that many people take seriously, especially in this market. Part of becoming a responsible homeowner is weighing every aspect of the decision before buying, including lifestyle preferences, job and financial situation and affordability. Fortunately for anyone who’s considering buying a home right now, current housing affordability conditions can benefit today’s buyers for years to come.
According to economists at the National Association of Realtors®, NAR’s housing affordability index could potentially reach an all-time high of near 200 in the second half of this year. That means that a household making the median income today would have twice the income necessary to buy a median-priced home in the U.S. Historically, over the past 40 years the average affordability index was 118.
The Arkansas Realtors® Association says housing affordability has increased recently due to rock bottom mortgage rates – the lowest on record. Rates for a 30-year fixed-rate mortgage are hovering around 4.4 percent. The average wage rate has made modest gains- as well. Despite the high unemployment rate, the average wage rate rose three percent in 2009 and is up 1.2 percent this year-to-date.
“For people who are ready to buy, today’s housing affordability is really helping them invest in their future through homeownership,” said Andy Meyers of Meyers Realty in Hot Springs and President-elect of the Arkansas Realtors® Association. “On a nationwide basis, the affordability conditions have risen to compelling levels. In Arkansas, as in the rest of the country, it truly is a buyer’s market. Prices are low and there are plenty of fantastic homes from which to choose.”
Today’s affordability conditions are saving buyers thousands of dollars a year. Consider a buyer who purchased a median-priced home five years ago with an FHA mortgage. With the required 3 percent down payment for an FHA mortgage, their monthly payment would have been $1,650. Today, with the current interest rate and median prices, that buyer would pay a monthly mortgage of $1,150. That equals a $500 savings per month or a $6,000 savings per year.
“The savings today’s buyers are receiving are not a one-time benefit,” said Meyers. “Buyers with fixed-rate mortgages will save money every year they are living in their home. This is truly an example of how homeownership builds wealth over the long term.”
In addition to favorable affordability conditions, there have been 763,000 private sector job creations from the beginning of the year to August. NAR says affordability and job creation are a move in the right direction for the housing market.
“Of course, jobs must return to the market for many Americans to even consider homeownership,” said Meyers. “But buyers who have reviewed their finances and believe they are in a secure position to become homeowners have an opportunity to take advantage of affordability conditions in today’s market and enjoy the social and financial benefits of homeownership for years to come.”
Want to learn more about the benefits of home ownership? Ask your local Realtor® or visit www.ArkansasRealtors.com for a list of 10 Reasons You Should Buy A Home Now.
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House to House is written by Amy Glover Bryant and distributed weekly by the Arkansas Realtors® Association.
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