Third quarter findings show that although the median home price ticked up to $221,000 from 2014's second quarter price of $214,000, buying a home is still an attainable prospect for over 61 percent of Americans. In early November, the National Association of Home Builders Chairman, David Kelly observed, "Low mortgage rates, strong job growth and affordable home prices make this a good time to buy a home." In fact, some of the country's hotter metro markets have also become more affordable.
As reported on the website, Interest.com which is operated by Bankrate, Minneapolis ranks number one for home affordability. To arrive at their conclusions, the firm reviewed figures for median income, home prices and mortgage rates to determine home affordability in the nation's 25 largest metro areas. Atlanta came in second as the most inexpensive big city in which to buy a home.
These two cities have both seen an influx of new residents, strong job growth, and even stronger home appreciation rates. According to Sperling's Best Places, since last year, Atlanta's home appreciation rate rose by 16.60 percent and it's up by 9.40 percent in Minneapolis. Another common thread these two metros share is the number of young adult residents. The median age in Minneapolis is 31.7 and in the ATL, it's 33.2. With the median age for U.S. first time homebuyers hovering around 29, the news regarding affordability will certainly be well received!
Rounding out the bottom of the list were Boston and New York. Although Boston bumped out the Big Apple in terms of higher home prices, affordability in Bean Town was greater. That's because even though properties in Boston may cost more, residents are making more, which led to Boston's higher affordability ranking.
Beyond Affordability
In considering a home purchase, it helps to keep in mind that there are other factors beyond price that make a home affordable, or not. So, even if you've secured a down payment and locked in on a competitive mortgage interest rate, remember that the buck doesn't stop there. There are numerous aspects of becoming a homeowner that hopeful buyers should be aware of. Along with the usual extra costs for items such as insurance, possible HOA dues, utility bills, and routine maintenance, some homes are simply more expensive to keep than others.
Some older homes can be more difficult to take care of and even update. Replacing big-ticket items like heating, wiring, roofing and plumbing can add up in a hurry. Those who buy with plans of renovating a property should first make sure that their proposed projects are financially feasible and achievable from a design and construction point of view. Also take note of how easy the home's exterior will be to maintain. Brick is typically less worrisome compared to wood, vinyl or stucco.
Homes with expansive open floor plans and 10 to 12 foot ceilings are still very popular. However, keep in mind how economical such a space would be to heat and cool. Also be aware that the larger a home is, the more time and money it will take to maintain it. With a larger home, everything from cleaning to painting just requires more money, time and effort.
For those who'll buy an existing home, obtain copies of past utility bills. This is a worthwhile endeavor because the expenses involved in heating and cooling a home plus other utility costs will be part of the constant overhead of home ownership. It is never a bad idea to have a home inspector assess and discuss changes and improvements that could be made to increase the home's energy efficiency. Cost effective upgrades such as installing a few solar panels or EnergyStar rated appliances, windows, and doors, could increase a home's overall affordability.
When calculating a property's level of affordability beyond the asking price and monthly mortgage, pay attention to the extras that go along with the home. Is there a swimming pool or elaborate landscaping that will require more time and money than you'd like to invest? By being realistic and taking the time to look for hidden costs associated with a home purchase, buyers stand a better chance of not committing to a long-term financial obligation they can not comfortably handle.
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