Home Affordability Improves Even As Prices Rise

The quarterly report from the National Association of Realtors® (NAR) on existing home sales and metropolitan home prices seem to indicate that home prices are increasing. NAR says that the overwhelming majority of the metro areas they track experienced both price gains and very limited inventory growth in the third quarter of the year. This sounds bad when you first take a look, but there is a silver lining to all this.

According to Mortgage News Daily “NAR said that home affordability improved in the third quarter as historically low interest rates compensated for rising home prices. Even as the median home price increased to $280,200 the average monthly mortgage payment fell to $1,033. When viewed as a share of the estimated national median family income of $79,215, monthly mortgage payments fell to 15.6 percent from 16.5 percent in the second quarter and 17.4 one year ago.”

With interest rates being as low as they are, it’s still a great time to refinance and/or purchase. Even as prices increase, the lower interest rates increase your buying power to compensate for any of those increases in value. How long the interest rates will be this low is anyone’s guess, but if you currently have the means and the desire to make positive financial gains, your window is currently open.