The Bottom Line about Charlotte Housing Affordability

By
Real Estate Agent with www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 228209

The Bottom Line about Housing Affordability

 

Housing affordability in Charlotte NCI watched one of my local channels this week in curiosity, waiting to hear their interviews ‘with local experts’ and detailed report on Charlotte’s housing affordability. Lately, there have been many headlines decrying an “affordability crisis” in the residential real estate market and this report was no different. 

 

While it is true that buying a home is less affordable than it had been, especially over the last ten years, what do today’s housing reports really mean? What do they really reflect about affordability and the local economy?

 

According to our local, so-called ‘experts’ who were interviewed for this particular local news story, first time homebuyers, who have been priced out of the market due to rising housing prices, should totally buy a lot and build a home. (Yes, that was his advice.)  Folks, no real estate agent with experience is going to tell you to do that in this market! So much for the ‘expert’ opinion on a subject that frequents the news and has possibly been the #1 real estate news story in 2019.

 

On a monthly basis, the National Association of Realtors (NAR), produces a Housing Affordability Index. According to NAR, the 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 price and income data.”

 

Their methodology states:

“To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.”

 

What this means is that the higher the index, the more affordable it is to purchase a home. Here is a graph of the index going back to 1990:

 

Charlotte housing affordability

*Graphics and data provided by Realtor.com via KCM (Keeping Current Matters)

 

The affordability index is lower today than any year from 2009 to 2017. However, we must realize the main reason homes were more affordable. That period of time immediately followed a housing crash and there were large numbers of distressed properties (foreclosures and short sales). Those properties were sold at large discounts. We really shouldn’t bemoan the fact that we’re not as affordable as then - many Americans didn’t have jobs and if they did, they were making considerably less than they are now. 

 

Today, the index is higher than any year from 1990 to 2008. Based on historic home affordability data, that means homes are more affordable right now than any other time besides the time following the housing crisis.

 

Mortgage rates remain historically low and wages are finally increasing, showing that it is MORE AFFORDABLE to purchase a home today than it was last year!

 

Bottom Line



With wages increasing, price appreciation moderating and mortgage rates remaining near all-time lows, purchasing a home is a smart financial move based on current and historic affordability numbers.

 

Thinking of buying a home in Charlotte? My advice to you is to bypass the media reports and…Let’s talk!

 

© Debe Maxwell | The Maxwell House Group | RE/MAX Executive | CharlotteBroker@icloud.com | The Bottom Line about Housing Affordability

Originally posted at http://athomescharlotte.com/realestate/home-buyers-guide/the-bottom-line-about-charlotte-housing-affordability/

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Rainmaker
3,302,189
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Debe. When the bankers paniced, the prices plummeted. A lesson to be learned! Enjoy your day!

May 31, 2019 05:04 AM #3
Rainmaker
5,036,790
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Good morning, Debe Maxwell, CRS this is a fine time to buy property....and more listings are coming on the market....prices are being adjusted to a more affordable price.... 

May 31, 2019 05:21 AM #4
Rainmaker
3,268,385
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

That  sounds like an oxymoron...first time buyers and new construction...not.

May 31, 2019 05:27 AM #5
Rainmaker
1,523,422
Amanda S. Davidson
Amanda Davidson Real Estate Group Brokered By eXp Realty - Alexandria, VA
Alexandria Virginia Homes For Sale

Debe, I had to read the paragraph twice with the "expert" saying first time home buyers should buy a lot and build. I thought I read it incorrectly the first time. Who says that?! You said it best - we shouldn't bemoan the fact that we're not as affordable as we were during a housing crash. The economy was in the dump during that time. Not something we should ever want. Rates are incredible in relation to how strong the economy is now and it's such a great time to buy. They should have interviewed you for the news story!  

May 31, 2019 05:58 AM #6
Rainmaker
5,424,678
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is good information to share.

Smart consumers are anxious to take advantage of the very attractive mortgage interest rates.

May 31, 2019 07:05 AM #7
Rainmaker
1,235,438
Sheri Sperry - MCNE®
Coldwell Banker Residential Brokerage - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi Debe Maxwell, CRS - Great explanation!  This should be featured. 

I guess that so-called "expert" has not talked to a REALTOR®. In Sedona, it is much more affordable to purchase an existing home than build from scratch.  Impact fees will eat you alive. Building costs right now are also going up monthly because of the scarcity of building supplies. In my area because of the terrain, it is a very expensive process. 

May 31, 2019 07:55 AM #8
Rainmaker
1,493,758
Georgie Hunter R(S) 58089
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

Buying a lot and building is great if you can afford the time and money it takes.... which can become years unless you opt for something easy and simple to build.  But it comes with a lot of heartache too, which oftern leads to divorce!  I always try to educate buyers who think it's a reasonable alternative to finding an affordable house.

May 31, 2019 04:31 PM #9
Rainmaker
1,943,488
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good evening Debe - everything is relative.  I like Endre's comment.

May 31, 2019 08:10 PM #10
Ambassador
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

LOL, Endre Barath, Jr.  Seriously, the economy is doing so well - higher salaries and low interest rates - despite the increase in prices, affordability is on the rise, based on the numbers! And you know that I will always send you my buyers!

May 31, 2019 09:27 PM #11
Ambassador
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Hi James Dray! I had dinner with friends who left their respective businesses during the last recession and started new, more recession-proof businesses. At this stage of the game, I have too much invested to even consider doing that, should we hit another one. All we can do is pray that it doesn't happen again in our lifetime!

May 31, 2019 09:35 PM #12
Ambassador
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

EXACTLY, Wayne Martin - lesson learned by those who paid attention!

May 31, 2019 09:37 PM #13
Ambassador
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Right, Barbara Todaro! It's a correction that naturally occurs - no reason at all to panic!

May 31, 2019 09:38 PM #14
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Oh, I'm SO with you on that, Sally K. & David L. Hanson - who tells the media these folks are the 'experts?' OH MY!!

May 31, 2019 09:40 PM #15
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

There are so many of us here in Charlotte, Amanda S. Davidson but, I would have preferred it had the station phoned the Association and asked for a recommendation or 10 of some experienced agents - not a newbie! 

I'm with you - we were in a totally different economy then and to have the massive income increases and the interest rates remaining so low, what a combination! 

May 31, 2019 09:46 PM #16
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

That is so true, Roy Kelley - they are definitely appealing right now!

May 31, 2019 09:47 PM #17
Ambassador
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Hi Sheri Sperry - MCNE®! It certainly is much more affordable to purchase an existing home than to build from scratch. Building costs here are sky-high and you will pay CONSIDERABLY more for new construction than a resale. I find it hard to believe that anyone would make that recommendation - an agent or someone from the public!!

I hope you have a fantastic weekend!

May 31, 2019 09:51 PM #18
Ambassador
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

You're smart to educate your buyers that way too, Georgie Hunter R(S) 58089 - an affordable resale is, by far, less expensive than a new build - really in any market.

With the tariffs driving the construction material prices up even more, there's just no way new construction could be more affordable than a resale!

May 31, 2019 09:58 PM #19
Ambassador
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

You're so right and the graphic is really eye-opening, isn't it?! 

I hope you have a fantastic weekend, Grant Schneider.

May 31, 2019 10:01 PM #20
Rainmaker
3,830,649
Dorie Dillard CRS GRI ABR
Coldwell Banker United Realtors® ~ 512.750.6899 - Austin, TX
Serving Buyers & Sellers in NW Austin Real Estate

Good evening Debe Maxwell, CRS ,

What a great post!! Educating our buyers is crucial..... resale is still a better buy than new construction especially if they have a pool and back to a greenbelt. The lot premium has been paid and the agony of permitting and building a pool has already been done!

Jun 01, 2019 04:37 PM #21
Ambassador
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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

That is so true, Dorie Dillard CRS GRI ABR ! Agents who have sold a few homes know this too! It's just a crazy notion that starting from scratch would ever be cheaper - at least in my area that's how it is!

Jun 01, 2019 09:41 PM #22
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