• Skip to main content
  • Skip to primary sidebar
  • Home
  • Ask A Question
  • Find Your Next Home
Real Estate Questions and Answers

Real Estate Questions and Answers

Important Distinction: Homes Are Less Affordable, Not Unaffordable

October 21, 2021 by Rick Landuyt

Important Distinction: Homes Are Less Affordable, Not Unaffordable | Simplifying The Market

It’s impossible to research the subject of buying a home without coming across a headline declaring that the fall in home affordability is a crisis. However, when we add context to the most recent affordability statistics, we soon realize that, though homes are less affordable than they have been over the last few years, they are more affordable than they historically have been.

Black Knight, a premier provider of data and analytics for the mortgage industry, just released their latest Monthly Mortgage Monitor which includes a new analysis of the affordability situation. Here’s what the report reveals:

“The monthly payment required to purchase the average priced home with a 20% down 30-year fixed rate mortgage increased by nearly 20% (+$210) over the first nine months of 2021, . . . It now requires 21.6% of the median household income to make the monthly mortgage payment on the average home purchase, the least affordable housing has been since 30-year rates rose to nearly 5% back in late 2018.”

Basically, the report shows that homes are less affordable today than at any other time in the last three years. However, in a previous report earlier this year, Black Knight calculated that the percentage of the median household income to make the monthly mortgage payment on the average home purchase over the last 25 years was 23.6% (see graph below):Important Distinction: Homes Are Less Affordable, Not Unaffordable | Simplifying The MarketToday’s payment-to-income ratio is more affordable than the average over the last 25 years. Given that context, we can see that American households still have the same ability to be homeowners as their parents did 20 years ago.

This confirms the recent analysis of ATTOM Data resources where Todd Teta, Chief Product and Technology Officer, explains:

“The typical median-priced home around the U.S. remains affordable to workers earning an average wage, despite prices that keep going through the roof. Super-low interests and rising pay continue to be the main reasons why.”

Bottom Line

It’s true that it’s less affordable to buy a home today than it has been the last few years. However, it’s more affordable to buy today than the average over the last 25 years. In other words, homes are less affordable, but they’re not unaffordable. That’s an important distinction.

Filed Under: Buying Myths, First Time Home Buyers, For Buyers, Housing Market Updates

Primary Sidebar

Ask Your Real Estate Question

Recent Posts

  • The One Thing Every Homeowner Needs To Know About a Recession
  • How Homeownership Can Bring You Joy
  • Why Rising Mortgage Rates Push Buyers off the Fence
  • If You’re a Homeowner, You Have Incredible Leverage When You Sell Today
  • Should You Update Your House Before Selling? Ask a Real Estate Professional. [INFOGRAPHIC]

Categories

  • Baby Boomers
  • Buying Myths
  • Demographics
  • Distressed Properties
  • Down Payments
  • First Time Home Buyers
  • For Agents
  • For Buyers
  • For Sellers
  • Foreclosures
  • FSBOs
  • Gen Z
  • Generation X
  • Holidays
  • Housing Market Updates
  • Infographics
  • Interest Rates
  • Luxury Market
  • Millennials
  • Move-Up Buyers
  • New Construction
  • Pricing
  • Questions and Answers
  • Rent vs. Buy
  • Selling Myths
  • Senior Market
  • Short Sales
  • Time-sensitive
  • Uncategorized
COLDWELL BANKER PROFESSIONALS - RICK LANDUYT - 67395 MAIN ST, RICHMOND, MI 48062 - (586) 727-2741