Is Buying a Home Still Affordable?

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As home values in the Prosper and Celina area have skyrocketed, affordability has become more of a challenge.  However, don’t give up!

Did you know that homes are still not too far out of reach for most buyers because of the current low mortgage rates?  Understanding how housing affordability works and the main market factors that impact it, may help those who are ready to buy a home in the Prosper and Celina area, by narrowing down the optimal window of time in which to make a purchase.

There are three main factors that go into determining how affordable homes are for buyers:

     1.  Mortgage Rates

     2.  Mortgage Payments as a Percentage of Income

     3.  Home Prices

Even though it can be argued that the median sales price for a home was much lower in prior years, you’d still have to take into account both the median household income and the average 30-year mortgage rate to really get a good idea of home affordability.  

The National Association of Realtors (NAR) produces a Housing Affordability Index. It takes these three factors into account and determines an overall affordability score for housing.  According to NAR, the higher the score, the more affordable it is to purchase a home.  Here is a graph of the score, or index, going back to 1990:

National Realtors Association - Housing Affordability Index


The blue bar represents today’s score.  As a result, we can see that homes are more affordable now than they’ve been at any time in the last eight years. 

Why are homes so affordable today?  The Bottom Line.

Although there are three factors that drive the overall equation, the one that’s playing the largest part in today’s homebuying affordability is the historically low mortgage rates. When considering both the current ultra-low mortgage rate and the rising median household income, the monthly payment for the record median home sales price is still affordable. In perspective, today’s affordability level is not yet concerning. As rates rise in the future, the housing market will most certainly downshift.

If you feel ready to buy, purchasing a home this summer may save you a significant amount of money over time based on historical affordability trends. And if you’re considering the Prosper and Celina area, I’d love to help you determine if now is the right time for you to make your move!

Contact Shannon Miles today!