It might appear that the homes for sale in your area are constantly getting more expensive. But here’s a surprising fact: Homes today are more affordable for most of the U.S. population than they have been in four decades.
Trulia recently released a look at home prices across the United States. The company found that across the nation, homes today are as affordable as they have been in the last 40 years.
According to the data, in 2016 a household earning the country's median income could afford a home 1.5 times more expensive than the median home price. In 1980, though, a household earning the median income could only afford to buy a residence that was three-quarters of the median home price.
This might be shocking considering that housing prices have long been rising and that wages haven’t risen nearly as fast. But Trulia pointed to one factor that is making a big difference for buyers today, historically affordable lower interest rates.
It’s true that recently interest rates have been on the rise, but historically they are still incredibly low. In fact, in the 1980s, it wasn’t unusual for buyers to pay interest rates of 15%—or more—for a mortgage loan. Today, it’s still possible to secure an interest rate of under 5% on a 30-year, fixed-rate mortgage, depending on your credit score and other factors.
These lower interest rates make paying off a mortgage loan far more affordable, despite the fact that housing prices continue to rise.
If you’re worried that you can’t afford a monthly mortgage payment, contact us using the information on page 4. We can go over your financials to see, with today’s low interest rates, just how much mortgage, and home, you can afford.