Even as home prices have risen, homes are more affordable. How’s that even possible? Follow me on this as you read below. Logically, it makes no sense … but the numbers don’t lie.
You know home prices are up in the Tri-Cities. We’ve been repeating that on a regular basis here. They’re also up across the country. CoreLogic is projecting home prices to rise this year in all 50 states.
But you know what’s changing just as much — if not more — than home prices?
Mortgage rates! They’re at the lowest rates in years, and Freddie Mac says they’re not far off from all-time lows.
Mortgage rates are down by almost a full percentage point since this time last year. Interest rates have fallen so much that homes are more affordable despite having a higher price tag. Here’s how the real estate analytics firm Black Knight explains it:
Despite the average home price increasing by nearly $13,000 from just over a year ago, the monthly mortgage payment required to buy that same home has actually dropped by 10% over that same span due to falling interest rates.
Put another way, buying power for those shopping for the average-priced home has increased by 16% (approximately $48,000) in just over a year’s time.
Isn’t that fascinating?!? And adding to home affordability is the fact that the median family income in the US was up 5% last year.
I guess the moral of the story is that buyers don’t need to be turned off by all the times we talk about home prices going up. Instead, take a look at how low mortgage rates are falling and keep in mind that your local lender may be able to help you get a lower payment even as home prices rise.
As always, if you have questions about the home buying aspects of all this, call, text or email us anytime. And if you have questions about financing and what you can afford, we’ll be happy to put you in touch with a couple of the excellent lenders we have in the Tri-Cities.