{"id":7411,"date":"2020-12-02T11:00:59","date_gmt":"2020-12-02T11:00:59","guid":{"rendered":"https:\/\/thezakariagroup.com\/with-home-values-surging-is-it-still-affordable-to-buy-right-now\/"},"modified":"2020-12-02T11:00:59","modified_gmt":"2020-12-02T11:00:59","slug":"with-home-values-surging-is-it-still-affordable-to-buy-right-now","status":"publish","type":"post","link":"https:\/\/thezakariagroup.com\/with-home-values-surging-is-it-still-affordable-to-buy-right-now\/","title":{"rendered":"With Home Values Surging, Is it Still Affordable to Buy Right Now?"},"content":{"rendered":"
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\"Housing<\/p>\n

Housing inventory is at an all-time low. Realtor.com<\/em> just reported<\/a> that there are 39% fewer homes for sale today<\/strong> than there were last year. At the same time, buyer demand remains strong. In a recent newsletter, research analyst Ivy Zelman explained:<\/span><\/p>\n

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“Although the headwind of severe supply constraints in most markets has contributed to slight moderation in seasonally-adjusted and year-over-year new pending contract growth for two consecutive months (albeit still growing strongly), the underlying strength of buyer demand<\/strong>, particularly for this time of year, remains apparent.”<\/strong><\/em><\/p>\n<\/blockquote>\n

Whenever there’s a shortage in the supply of an item that’s in high demand, the price of that item increases. That’s exactly what’s happening in the real estate market right now. As a result, home values are surging.<\/p>\n

This is great news if you’re planning to sell your house. On the other hand, as either a first-time or repeat buyer, this may instead seem like troubling news. Purchasers, however, should realize that the price of a house is not as important as the monthly cost<\/a>. Here’s how it breaks down.<\/p>\n

There are several factors that influence the cost of a home. Two of the major ones are:<\/p>\n

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  1. The price of the home<\/li>\n
  2. The mortgage rate at which a buyer can borrow the funds necessary to purchase the home<\/li>\n<\/ol>\n

    How do these factors impact affordability?<\/strong><\/h4>\n

    The National Association of Realtors<\/em> (NAR) produces a Housing Affordability Index<\/a> which takes these factors into account and determines an overall affordability score for housing. According to NAR, the index:<\/p>\n

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    “…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.”<\/em><\/p>\n<\/blockquote>\n

    Their methodology states:<\/p>\n

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    “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.”<\/em><\/p>\n<\/blockquote>\n

    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:\"With<\/a>The blue bar represents today’s affordability. We can see that homes are more affordable now than they were from:<\/p>\n