There are many headlines about how housing affordability is declining. The headlines are correct: it’s less affordable to purchase a home today than it was a year ago. However, it’s important to give this trend context.
When we talk about housing, there are more variables than just price. Another important piece is the interest rate.
For example, a home in 1990 may have cost $114,120 vs. home now at $337,410, however the mortgage rate shows a different story.
In 1990, mortgage rates were at 10.16% making a homeowner's payment around $2100.
Now mortgage rates have been as low as 2.77 making the monthly payment at $1381.
So in conclusion if you want to buy a home, don’t let the headlines about affordability discourage you. You can’t get the deal your friend got last year, but you will get a better deal than your parents did 20 years ago and your grandparents did 40 years ago.
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