Best Time to Sell Your Home

South Florida Coastal Group
Published on July 8, 2020

Best Time to Sell Your Home

Taking Advantage of Homebuying Affordability in Today’s Market

Taking Advantage of Homebuying Affordability in Today’s Market | MyKCM

Everyone is ready to buy a home at different times in their lives,
and despite the health crisis, today is no exception. Understanding how
affordability works and the main market factors that impact it may help
those who are ready to buy a home narrow down their optimal window of
time to make a purchase.

There are three main factors that go into determining how affordable homes are for buyers:

  1. Mortgage Rates
  2. Mortgage Payments as a Percentage of Income
  3. Home Prices

The National Association of Realtors (NAR), produces a Housing Affordability Index,
which takes these three factors into account and determines an overall
affordability score for housing. According to NAR, the 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 price and income data.”

Their methodology states:

“To interpret the
indices, a value of 100 means that a family with the median income has
exactly enough income to qualify for a mortgage on a median-priced home.
An index above 100 signifies that family earning the median income has
more than enough income to qualify for a mortgage loan on a
median-priced home, assuming a 20 percent down payment.”

Taking Advantage of Homebuying Affordability in Today’s Market | MyKCM

So, the higher the index, the more affordable it is to purchase a home. Here’s a graph of the index going back to 1990:The
green bar represents today’s affordability. We can see that homes are
more affordable now than they have been at any point since the housing
crash when distressed properties (foreclosures and short sales)
dominated the market. Those properties were sold at large discounts not
seen before in the housing market.

Why are homes so affordable today?

Although there are three factors that drive the overall equation, the
one that’s playing the largest part in today’s homebuying affordability
is historically low mortgage rates. Based on this primary factor, we can see that it is more affordable to buy a home today than at any time in the last seven years.

If you’re considering purchasing your first home or moving up to the
one you’ve always hoped for, it’s important to understand how
affordability plays into the overall cost of your home. With that in
mind, buying while mortgage rates are as low as they are now may save
you quite a bit of money over the life of your home loan.

Bottom Line

If you feel ready to buy, purchasing a home this season may save you
significantly over time based on historic affordability trends. Let’s
connect today to determine if now is the right time for you to make your
move.

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