Behind the Numbers: Exploring the Trio of Factors Impacting Home Affordability

While the bill has passed the European Parliament, the measure now has to be passed unanimously by every country’s government.

To gain a comprehensive understanding of home affordability, it's crucial to examine the interplay of three key elements: mortgage rates, housing costs, and income levels. Let's delve into the most recent data for each of these factors to discern the reasons behind the improvement in affordability.

1. Mortgage Rates

Mortgage rates have come down in recent months. And looking forward, most experts expect them to decline further over the course of the year. Jiayi Xu, an economist at Realtor.comexplains:

“While there could be some fluctuations in the path forward … the general expectation is that mortgage rates will continue to trend downward, as long as the economy continues to see progress on inflation.”

And even a small change in mortgage rates can have a big impact on your purchasing power, making it easier for you to afford the home you want by reducing your monthly mortgage payment.

2. Home Prices

The second important factor is home prices. After going up at a relatively normal pace last year, they’re expected to continue rising moderately in 2024. That’s because even with inventory projected to grow slightly this year, there still aren’t enough homes for sale for all the people who want to buy them. According to Lisa Sturtevant, Chief Economist at Bright MLS:

“More inventory will be generally offset by more buyers in the market. As a result, it is expected that, overall, the median home price in the U.S. will grow modestly . . .”

That’s great news for you because it means prices aren’t likely to skyrocket like they did during the pandemic. But it also means it’ll probably cost you more to wait. So, if you’re ready, willing, and able to buy, and you can find the right home, purchasing before more buyers enter the market and prices rise further might be in your best interest.

3. Wages

Another positive factor in affordability right now is rising income. The graph below uses data from the Federal Reserve to show how wages have grown over time: 

If you look at the blue dotted trendline, you can see the rate at which wages typically rise. But on the right side of the graph, wages are above the trend line today, meaning they’re going up at a higher rate than normal.

Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage. That’s because you don’t have to put as much of your paycheck toward your monthly housing cost.

What This Means for You

Home affordability depends on three things: mortgage rates, home prices, and wages. The good news is, they’re moving in a positive direction for buyers overall.

Bottom Line

If you're thinking about buying a home, it's important to know the main factors impacting affordability are improving. To get the latest updates on each, let's connect.

633 Properties
Page 1 of 53
$179,000
Neighborhood: Indigo Isles Mobile Home Park
1
Beds
2
Baths
640
Sq.Ft.
1973
Year Built
1
Day on Site
D6136942
MLS
$350,000
Neighborhood: Sanctuary At Golden Tee Ph 04
3
Beds
2
Baths
1,468
Sq.Ft.
1997
Year Built
2
Days on Site
D6136966
MLS
Open 6/15
7403 Ashtabula St Englewood,  FL 34224
$298,900
Neighborhood: Port Charlotte Sec 084
3
Beds
2
Baths
1,224
Sq.Ft.
2001
Year Built
3
Days on Site
C7493961
MLS
$820,000
Neighborhood: Redfish Key Villas
2
Beds
2F11/2
Baths
1,821
Sq.Ft.
2007
Year Built
3
Days on Site
A4586803
MLS
$299,990
Neighborhood: Overbrook Gardens
2
Beds
1
Baths
889
Sq.Ft.
1960
Year Built
3
Days on Site
U8246307
MLS
$335,000
Neighborhood: Port Charlotte Sec 065
3
Beds
2
Baths
1,774
Sq.Ft.
1982
Year Built
3
Days on Site
D6136899
MLS
Open 6/15
1712 Overbrook Rd Englewood,  FL 34223
$599,000
Neighborhood: Englewood Gardens
2
Beds
2
Baths
1,580
Sq.Ft.
1950
Year Built
4
Days on Site
D6136944
MLS
$350,000
Neighborhood: Overbrook Gardens
2
Beds
2
Baths
1,342
Sq.Ft.
1979
Year Built
4
Days on Site
D6136972
MLS
$155,000
Neighborhood: Lemon Bay Isles
2
Beds
2
Baths
940
Sq.Ft.
1988
Year Built
4
Days on Site
N6129849
MLS
$309,000
Neighborhood: Hol Mob Estates 3Rd Add
3
Beds
2F11/2
Baths
2,052
Sq.Ft.
1998
Year Built
4
Days on Site
D6136973
MLS
$330,000
Neighborhood: Longlake Estates
3
Beds
2
Baths
1,365
Sq.Ft.
1968
Year Built
4
Days on Site
O6214481
MLS
$410,000
Neighborhood: Pine Lake Dev
3
Beds
2
Baths
1,612
Sq.Ft.
1988
Year Built
5
Days on Site
O6214043
MLS

Post a Comment