• Home
  • Buying
    • Eight steps to buying your home
  • Selling
    • Contact us about selling a property
    • Eight steps to selling your home
  • About
    • Proof and Results
  • Our Story
    • Realtor® Stories
  • Testimonials
  • Communities
    • Boston Back Bay
    • Dedham
    • Milton MA 02186 Real Estate YourStories Realty Group w/ KW Realty
    • Newton
    • Wellesley
    • Weston
    • Westwood
  • Blog: Truth and Service
  • Search Properties
    • Searching for Your Dream Home
    • Deciding how much house you can afford
    • Creating your home wishlist
    • Opting for new home construction
  • What is Your Story?
  • Contact

Boston, Newton and Milton Homes | Larry Lawfer 617-774-8292

Your Stories Realty Group

phone: 617-774-8292

Follow Us on FacebookFollow Us on Google+Follow Us on TwitterFollow Us on LinkedInFollow Us on PinterestFollow Us on YouTubeFollow Us on YelpFollow Us on FlickrFollow Us on InstagramFollow Us on E-mail

Larry Lawfer

You are here: Home / Buying Myths / Dispelling the Myth About Home Affordability

Dispelling the Myth About Home Affordability

October 11, 2018 by Larry Lawfer

Dispelling the Myth About Home Affordability | Simplifying The Market

We have all seen the headlines that report that buying a home is less affordable today than it was at any other time in the last ten years, and those headlines are accurate. But, have you ever wondered why the headlines don’t say the last 25 years, the last 20 years, or even the last 11 years?

The reason is that homes were less affordable 25, 20, or even 11 years ago than they are today.

Obviously, buying a home is more expensive now than during the ten years immediately following one of the worst housing crashes in American history.

Over the past decade, the market was flooded with distressed properties (foreclosures and short sales) that were selling at 10-50% discounts. There were so many distressed properties that the prices of non-distressed properties in the same neighborhoods were lowered and mortgage rates were kept low to help the economy.

Low Prices + Low Mortgage Rates = High Affordability

Prices have since recovered and mortgage rates have increased as the economy has gained strength. This has and will continue to impact housing affordability moving forward.

However, let’s give affordability some historical context. The National Association of Realtors (NAR) issues their Affordability Index each month. According to NAR:

“The Monthly Housing Affordability 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 monthly price and income data.”

NAR’s current index stands at 138.8. The index had been higher each of the last ten years, peaking at 197 in 2012 (the higher the index the more affordable houses are).

But, the average index between 1990 and 2007 was just 123 and there were no years with an index above 133. That means that homes are more affordable today than at any time during the eighteen years between 1990 and 2007.

Bottom Line

With home prices continuing to appreciate and mortgage rates increasing, home affordability will likely continue to slide. However, this does not mean that buying a house is not an attainable goal in most markets as it is less expensive today than during the eighteen-year stretch immediately preceding the housing bubble and crash.

Filed Under: Buying Myths, For Buyers, For Sellers, Housing Market Updates Tagged With: first time home buyers

Copyright © 2019 · AgentPress Pro Theme on Genesis Framework · WordPress · Log in