Forget the Price of the Home. The Cost is What Matters.

By
Real Estate Agent with REMAX Realty Group Lic. # SL3154233

 

Home buying activity (demand) is up, and the number of available listings (supply) is down. When demand outpaces supply, prices appreciate. That’s why firms are beginning to increase their projections for home price appreciation going forward. As an example, CoreLogic increased their 12-month projection for home values from 4.5% to 5.6% over the last few months.

The reacceleration of home values will cause some to again voice concerns about affordability. Just last week, however, First American came out with a data analysis that explains how price is not the only market factor that impacts affordability. They studied prices, mortgage rates, and wages from January through August of this year. Here are their findings:

Home Prices

“In January 2019, a family with the median household income in the U.S. could afford to buy a $373,900 house. By August, that home had appreciated to $395,000, an increase of $21,100.”

Mortgage Interest Rates

“The 0.85 percentage point drop in mortgage rates from January 2019 through August 2019 increased affordability by 9.7%. That translates to a $40,200 improvement in house-buying power in just eight months.”

Wage Growth

“As rates have fallen in 2019, the economy has continued to perform well also, resulting in a tight labor market and wage growth. Wage growth pushes household incomes upward, which were 1.5% higher in August compared with January. The growth in household income increased consumer house-buying power by 1.5%, pushing house-buying power up an additional $5,600.”

When all three market factors are combined, purchasing power increased by $24,500, thus making home buying more affordable, not less affordable. Here is a table that simply shows the data:

Home valuations

Posted by

 

Abby Stiller 

Realtor® Lic. #3154233    

12 Years of Experience

RE/MAX Realty Group    Cape Coral Fort Myers Naples  Realtor Cape Coral      

 

I help Home buyers find their dream home & Homeowners sell for more. Thinking of buying or selling? Call/Text me: 239-284-8637   Your Honest & Dedicated Realtor!

or visit: www.TeamStiller.com

 

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Rainmaker
2,651,696
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

That is certainly a study that makes sense and should have buyers chomping at the bit to purchase a home, rather than rent.

Nov 12, 2019 06:26 AM #1
Rainer
479,303
Rose Mary Justice
Synergy Realty Pros - Dandridge, TN
Synergy Realty Pros

You have compiled data that proves what you are saying. Good job

Nov 12, 2019 06:27 AM #2
Rainmaker
3,246,025
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Abby,  Great information and buyers and sellers should be seeing this blog for your wealth of knowledge.

 

Nov 13, 2019 08:18 AM #3
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Abby Stiller

Professional Bilingual Realtor (239) 284-8637
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