The Three Factors Affecting Home Affordability Today

 When it comes to buying a home, affordability is always a major concern. While many people tend to focus on mortgage rates and how they affect home affordability, there are actually three main factors that come into play. These factors include mortgage rates, home prices, and wages. By understanding how each of these factors influences affordability, you can make better-informed decisions when it comes to buying a home. In this article, we’ll explore each of these factors in more detail and explain how they impact home affordability.

Understanding Mortgage Rates

Mortgage rates are one of the most important factors that affect home affordability. When mortgage rates rise, your purchasing power decreases, and you may not be able to afford the home you want. While mortgage rates have been higher than they were a year ago, they’ve remained relatively stable over the past few months, hovering between 6% and 7%

While there has been some volatility in mortgage rates, it’s important to remember that even a small change can impact your purchasing power. To stay up to date on what’s happening in the market, it’s always a good idea to work with a team of real estate professionals who can provide you with expert advice.

Examining Home Prices

Home prices are another important factor that affects affordability. In recent years, home prices have appreciated rapidly due to the surge in buyer demand that occurred during the pandemic. However, the record-low mortgage rates we saw during that time also led to a supply shortage, which put upward pressure on prices. Today’s higher mortgage rates have slowed down price appreciation, though it’s important to note that home price appreciation can vary widely by market.

As Selma Hepp, Chief Economist at CoreLogic, explains, “The divergence in home price changes across the U.S. reflects a tale of two housing markets. Declines in the West are due to the tech industry slowdown and a severe lack of affordability after decades of undersupply. The consistent gains in the Southeast and South reflect strong job markets, in-migration patterns, and relative affordability due to new home construction.”

To get a better understanding of what’s happening with home prices in your local market, reach out to a trusted real estate agent.

Considering Wages

While rising mortgage rates and home prices can make home affordability more challenging, rising wages can help offset some of these factors.

Higher wages improve affordability because they reduce the percentage of your income that you need to put toward your monthly housing cost. This is good news for potential homebuyers who are concerned about affordability.

Bringing It All Together

Ultimately, home affordability is determined by a combination of mortgage rates, home prices, and wages. By keeping an eye on all three of these factors, you can get a more accurate picture of what you can afford and make informed decisions when it comes to buying a home. Working with a trusted real estate professional can help you stay up to date on market trends and get expert advice tailored to your unique situation.

Conclusion

Home affordability is a complex issue that is influenced by a variety of factors. While mortgage rates, home prices, and wages are three of the most important factors to consider, there are other factors that can impact affordability as well. By staying informed and working with a real estate professional, you can make sure you have the information you need to make the best decisions when it comes to buying a home.

To learn more about the Prescott, Arizona real estate market contact Michael Eastwood CEO of West USA Realty of Prescott at 928-636-1500 or visit us at www.westusaofprescott.com Michael will introduce you to one of his professional real estate agents. (Each office is Independently owned and operated) #Prescottrealestate #Prescotthomes #Prescottland #Prescottvalleyrealestate #Prescottvalleyhomes #Prescottvalleyland #Chinovalleyrealestate #Chinovalleyhomes #Chinovalleyland #Arizonarealestate #Arizonahomes #realestate #homes #prescott #chinovalley #Prescottvalley #buyers