Buyer Power
It’s no secret that for the present time, the real estate market in Granite Bay and the surrounding areas continues to be strong. While some people believe that because home prices are appreciating, it is not a good time to purchase, the truth is that low mortgage rates are actually making homes more affordable.
Black Knight, Inc., a provider of high-performance software, data and analytics for mortgage and home equity lending and services, publishes a plethora of reports, blogs, and charts. According to an August post by Black Knight:
- While home prices have risen for 97 consecutive months, July’s record-low mortgage rates have made purchasing the average-priced home the most affordable it’s been since 2016
- Buying power for those shopping for a home is up 10% year over year, with home buyers able to afford nearly $32,000 more home than they could have 1 year ago while keeping their monthly payment the same
As Black Knight Data & Analytics President Ben Graboske explains:
“Despite eight consecutive years of rising home prices, July’s record-low mortgage rates, which fell below 3% for the first time on July 16, have made purchasing the average-priced home for a median wage earner the most affordable since late 2016. Falling rates and improved affordability have helped to spur home-buying demand, and therefore purchase origination volume, which has provided a much-needed backstop for home prices in the wake of the COVID-19 pandemic.
“As of mid-July, it required 19.8% of the median monthly income to make the mortgage payment on the average-priced home purchase, assuming a 20% down payment and a 30-year mortgage. That was more than 5% below the average of 25% from 1995-2003. This means it currently requires a $1,071 monthly payment to purchase the average-priced home, which is down 6% from the same time last year, despite the average home increasing in value by more than $12,000 during that same time period. In fact, buying power is now up 10% year-over-year, meaning the average home buyer can afford nearly $32,000 more home than they could at the same time last year, while keeping their monthly payment the same.”
Whether you’re thinking of purchasing your first home or planning to buy a new one, now is a great time to take advantage of the affordability that comes with such low mortgage rates. Savvy buyers will get pre-qualified with their lender prior to shopping for a new home. This helps them by learning what they can actually afford so they don’t spend time on properties for which they don’t qualify.
While it’s impossible to predict how long this trend of low mortgage rates will continue, one thing is certain: at this point in time, buyers’ buying power is trending up!
Debbie Austin is a realtor associate with Keller Williams, Roseville and has been helping clients buy and sell property in the area for 16 years. If you have a specific real estate question you wish to see addressed, contact Debbie at debbieaustin@kw.com or debbieaustingroup.com.
