Do you want content like this delivered to your inbox?
Share
Share

House-Buying Power at Near-Historic Levels

Christopher Sabate
Sep 30 3 minutes read

Their index is based on three components:

  1. Median Household Income
  2. Mortgage Interest Rates
  3. Home Prices

The report explains:

“Changing incomes and interest rates either increase or decrease consumer house-buying power or affordability. When incomes rise and/or mortgage rates fall, consumer house-buying power increases.”

Combining these three crucial pieces of the home purchasing process, First Americancreated an index delineating the actual home-buying power that consumers have had dating back to 1991.

Here is a graph comparing First American’s consumer house-buying power (blue area) to the actual median home price that year from the National Association of Realtors (yellow line).

Consumer house-buyer power has been greater than the actual price of a home since 1991. And, the spread is larger over the last decade.

Bottom Line

Even though home prices are increasing rapidly and are now close to the values last seen a decade ago, the actual affordability of a home is much better now. As Chief Economist Mark Fleming explains in the report:

“Though un-adjusted house prices have risen to record highs, consumer house-buying power stands at near-historic levels, as well, signaling that real house prices are not even close to their historical peak.”


I Am Ready to Buy a House... Now What?

I love working with first time buyers. Their enthusiasm for this new journey they are abou...

Read More

Search | Maryland, Virginia and DC Real Estate | Homes and Properties for sale | Crawford & Lee Team Realtors

Crawford & Lee Team Realtors lists homes for sale and real estate in the Montgomery &a...

Read More

Want to learn more about buying?

Schedule a NO Cost, NO Obligation consultation today.

We use cookies to enhance your browsing experience and deliver our services. By continuing to visit this site, you agree to our use of cookies. More info