Buying Myths
Homes Are More Affordable Today, Not Less Affordable
There’s a current narrative that owning a home today is less affordable than it has been in the past. The reason some are making this claim is because house prices have substantially increased over the last several years.
It’s not, however, just the price of a home that matters.
Homes, in most cases, are purchased with a mortgage. The current mortgage rate is a major component of the affordability equation. Mortgage rates have fallen by over a full percentage point since December 2018. Another major piece of the affordability equation is a buyer’s income. The median family income has risen by approximately 3% over the last year.
The National Association of Realtors (NAR) releases a monthly Housing Affordability Index. The latest index shows that home affordability is better today than at almost any point over the last 30 years. The index determines how affordable homes are based on the following:
“A Home Affordability Index 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 of 120 signifies that a family earning the median income has 20 percent more than the level of income needed pay the mortgage on a median-priced home, assuming a 20 percent down payment so that the monthly payment and interest will not exceed 25 percent of this level of income (qualifying income).”
The higher the index, therefore, the more affordable homes are. Here is a graph showing the index since 1990:
Obviously, affordability was better during the housing crash when distressed properties – foreclosures and short sales – sold at major discounts (2009-2015). Outside of that period, however, homes are more affordable today than any other year since 1990, except for 2016.
The report on the index also includes a section that calculates the mortgage payment on a median priced home as a percentage of the median national income. Historically, that percentage is just above 21%. Here are the percentages since June of 2018:
Again, we can see that affordability is much better today than the historical average and has been getting better over the last year and a half.
Bottom Line
Whether you’re thinking about buying your first home or moving up to the home of your dreams, don’t let the false narrative about affordability prevent you from moving forward. From an affordability standpoint, this is one of the best times to buy in the last 30 years.
Some Highlights
- Hiring an agent when buying a home helps you understand the buying process and the local market.
- They’ll also go over contracts and fine print with you, so you understand what you’re agreeing to. Plus, they’re good at negotiating, making sure you get the best deal.
- Expert advice from a trusted real estate professional is priceless. Connect with a local agent today.
One of the biggest hurdles buyers have faced over the past few years has been a lack of homes available for sale. But that’s starting to change.
The graph below uses the latest data from Realtor.com to show there are more homes on the market in 2024 than there have been in any of the past several years (2021-2023):
Does That Mean Finding a Home Is Easier?
The answer is yes, and no. As an article from Realtor.com says:
“There were nearly 15% more homes for sale in February than a year earlier . . . That alone could jolt the housing market a bit if more “For Sale” signs continue to appear. However, the nation is still suffering from a housing shortage even with all of that new inventory.”
Context is important. On the one hand, inventory is up over the past few years. That means you’ll likely have more options to choose from as you search for your next home.
But, at the same time, the graph above also shows there are still significantly fewer homes for sale than there would usually be in a more normal, pre-pandemic market. And that deficit isn’t going to be reversed overnight.
What Does This Mean for You?
You might find a few more choices now than in recent years, but you shouldn’t expect a ton of options.
To help you explore the growing list of choices you have now, team up with a local real estate agent you trust. They can really help you understand the inventory situation where you want to buy. That’s because real estate is local. An experienced agent can share some smart tips they’ve used to help other buyers in your area deal with ongoing low housing supply.
Bottom Line
If you’re thinking about buying a home, team up with a local real estate agent. That way, you’ll be up to date on everything that could affect your move, including how many homes are for sale right now.
In today’s housing market, more and more single women are becoming homeowners. According to data from the National Association of Realtors (NAR), 19% of all homebuyers are single women, while only 10% are single men.
If you’re a single woman trying to buy your first home, this should be encouraging. It means other people are making their dreams a reality – so you can too.
Why Homeownership Matters to So Many Women
For many single women, buying a home isn’t just about having a place to live—it’s also a smart way to invest for the future. Homes usually increase in value over time, so they’re a great way to build equity and overall net worth. Ksenia Potapov, Economist at First American, says:
“. . . single women are increasingly pursuing homeownership and reaping its wealth creation benefits.”
The financial security and independence homeownership provides can be life-changing. And when you factor in the personal motivations behind buying a home, that impact becomes even clearer.
The same report from NAR shares the top reasons single women are buying a home right now, and the reality is, they’re not all financial (see chart below):
If any of these reasons resonate with you, maybe it’s time for you to buy too.
Work with a Trusted Real Estate Agent
If you’re a single woman looking to buy a home, it is possible, even in today’s housing market. You’ll just want to be sure you have a great real estate agent by your side.
Talk about what your goals are and why homeownership is so important to you. That way your agent can keep what’s critical for you up front as they guide you through the buying process. They’ll help you find the right home for your needs and advocate for you during negotiations. Together, you can make your dream of homeownership a reality.
Bottom Line
Homeownership is life-changing no matter who you are. Connect with a local real estate agent to talk about your goals in the housing market.
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