THE 3 FACTORS THAT AFFECT HOME AFFORDABILITY

THE 3 FACTORS THAT AFFECT HOME AFFORDABILITY

If you have been keeping up with the housing market recently, you may have heard about the increasing challenges of affordability. However, experts are predicting that the key factors affecting housing affordability are set to improve in the upcoming year. Selma Hepp, Executive Deputy Chief Economist at CoreLogic, is optimistic, stating that with slowly improving affordability and a more positive economic outlook, the housing market is expected to show resilience in 2023.

Home affordability is determined by three main factors: home prices, mortgage rates, and wages. Let's take a closer look at each of them.

Mortgage Rates:
Last year, mortgage rates reached over 7%, causing many potential buyers to delay their plans. Fortunately, the scenario is changing as rates are starting to decrease now. George Ratiu, Senior Economist at realtor.com, highlighted this positive trend by mentioning that mortgage rates are on a downward trajectory. With expectations of inflation slowing down, mortgage rates are likely to follow suit. Even a slight change in rates can significantly impact your purchasing power, making homeownership more accessible to more individuals.

Home Prices:
In response to the skyrocketing prices during the pandemic, Lawrence Yun, Chief Economist at NAR, forecasts that there will be little to no changes in home prices nationally in 2024.

. While some areas may experience minor price increases, others could see slight declines. To understand how these price fluctuations may affect affordability in your local market, it's best to consult with a trusted real estate professional.

Wages:
In assessing affordability, it's essential to consider wages alongside mortgage rates and home prices. The data from the Bureau of Labor Statistics indicates a consistent increase in wages over time, providing buyers with more purchasing power. As wages continue to rise, more individuals may find themselves in a better position to enter the housing market.

Despite the ongoing affordability challenges, current trends and projections suggest that 2023 could bring some relief to homebuyers. Predictions of lower mortgage rates and a cooling home price growth by experts like Mike Fratantoni from the Mortgage Bankers Association indicate a more favorable outlook for affordability this year.

If you have any questions or need guidance on navigating the current market conditions, feel free to reach out to our real estate agents at OnDemand Realty to guide you. They can connect you with a reputable local lender and provide the assistance you need to move closer to owning your dream home. Remember, with the market dynamics shifting positively, your homeownership goals may be more achievable than you realize.