Connect

Find us on...

Dashboard

Login using...

New Search X

House-Buying Power At Near-Historic Levels

Posted by David E. DeChant on Thursday, July 12th, 2018 at 8:55am.

We keep hearing that home affordability is approaching crisis levels. While this may be true in a few metros across the country, housing affordability is not a challenge in the clear majority of the country. In their most recent Real House Price Index, First American reported that consumer “house-buying power” is at “near-historic levels.”

Their index is based on three components:

  1. Median Household Income
  2. Mortgage Interest Rates
  3. Home Prices

The report explains:

“Changing incomes and interest rates either increase or decrease consumer house-buying power or affordability. When incomes rise and/or mortgage rates fall, consumer house-buying power increases.”

Combining these three crucial pieces of the home purchasing process, First American created an index delineating the actual home-buying power that consumers have had dating back to 1991.

Here is a graph comparing First American’s consumer house-buying power (blue area) to the actual median home price that year from the National Association of Realtors (yellow line).

Consumer house-buyer power has been greater than the actual price of a home since 1991. And, the spread is larger over the last decade.

Bottom Line

Even though home prices are increasing rapidly and are now close to the values last seen a decade ago, the actual affordability of a home is much better now. As Chief Economist Mark Fleming explains in the report:

“Though unadjusted house prices have risen to record highs, consumer house-buying power stands at near-historic levels, as well, signaling that real house prices are not even close to their historical peak.”

 

 

Source: https://www.keepingcurrentmatters.com/2018/07/12/house-buying-power-at-near-historic-levels/ 

4 Responses to "House-Buying Power At Near-Historic Levels"

Want To Sell Your House Faster? Don’t Forget To Stage! [INFOGRAPHIC] wrote: [...]Links

House-Buying Power At Near-Historic Levels
Rising Interest Rates Have Not Dampened Demand
How Long Do Most Families[...]

Posted on Friday, July 13th, 2018 at 3:00pm.

First-Time Home Buyers Continue To Put Down Less Than 6%! wrote: [...]
Want To Sell Your House Faster? Don’t Forget To Stage! [INFOGRAPHIC]
House-Buying Power At Near-Historic Levels
Rising Interest Rates Have Not Dampened Demand




Tags

[...]

Posted on Tuesday, July 17th, 2018 at 10:08am.

4 REAL Reasons Why We Buy A Home! wrote: [...] Want To Sell Your House Faster? Don’t Forget To Stage! [INFOGRAPHIC]
House-Buying Power At Near-Historic Levels




Tags

First Time Home Buyers (93)
For Buyers (114)
[...]

Posted on Tuesday, July 17th, 2018 at 10:18am.

Move wrote: Quit interesting, thanks for the tips! You have covered a lot, Thanks for sharing.

Posted on Thursday, November 1st, 2018 at 3:16am.

Leave a Comment

Get Pre-Approved For a Mortgage 

 

 

Learn About Becoming a Redco Agent

Find us on FACEBOOK