What are Buyers Waiting For?
Did you know 72% of median-income Americans can afford to buy the average median-priced home in today’s housing market? Super low interest rates and affordable prices have brought homeownership within reach for more people than we realize. You might be surprised – you could be one of them!
The typical percentage of qualified buyers usually ranges somewhere in the 50s or 60s. Today, that number has jumped up into the 70s. The increase in affordability is largely due to phenomenal interest rates and decreased home prices. Last week’s national average for a 30-year fixed mortgage rate was 4.32%, according to Freddie Mac. That is extremely low and can really make a difference in your monthly payments. Compare it to when your parents’ generation was buying homes in 1980:
$100,000 loan at 16.32% (average rate in 1980) equals $1,450 (P + I)
$100,000 loan at 4.5% (above last week’s average) equals $580 (P + I)
That’s a huge money-saver!
If that’s not enough to pique your interest, you should know – every major index in the industry indicates that home sale prices are stabilizing or appreciating in markets across the country. Those waiting for prices to come down further may find they’ve missed their window of opportunity.
What about the vast quantity of foreclosures that have deeply discounted prices, you ask? Yes, there is a large supply of bank-owned properties out there. However, lenders seem to be keeping most of this “shadow inventory” off the market to prevent price depression of conventional home sales and to improve their balance sheets.
The bottom line is – it appears as though the bottom has already come and gone. Chicago home buyers who were waiting to get a great deal may want to speak with a real estate agent ASAP to assess their finances and find out what their options are in the current marketplace.
There are several factors that affect the overall health of America’s housing landscape, including employment rates and consumer confidence. Forecasting the next trend is something experts and analysts pour over day in and day out. Still, the only thing that’s for certain is: time will tell what the future holds.