Is It Getting More Affordable To Buy a Home?

<article class="post-1012951 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-1012951"><span class="entry-date">April 18, 2024</span><div class="entry-header center-block text-center"><h1 class="entry-title">Is It Getting More Affordable To Buy a Home?</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=Is+It+Getting+More+Affordable+To+Buy+a+Home%3F&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fis-it-getting-more-affordable-to-buy-a-home%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="Is It Getting More Affordable To Buy a Home? Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20240418-Is-It-Getting-More-Affordable-To-Buy-a-Home.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width=""/>
<p>Over the past year or so, a lot of people have been talking about how tough it is to <a href="https://www.simplifyingthemarket.com/2024/04/03/newly-built-homes-could-be-a-game-changer-this-spring/" rel="noopener noreferrer" target="_blank">buy a home</a>. And while there’s no arguing affordability is still tight, there are signs it’s starting to get a bit better and may improve even more throughout the year. Elijah de la Campa, Senior Economist at <em>Redfin</em>, <a href="https://www.businessinsider.com/can-i-afford-a-house-median-income-mortgage-rates-redfin-2024-3" rel="noopener noreferrer" target="_blank">says</a>:</p>
<blockquote><p><em>“</em><strong><em>We’re slowly climbing our way out of an affordability hole, but we have a long way to go.</em></strong><em> Rates have come down from their peak and are expected to fall again by the end of the year, which should make homebuying a little more affordable and incentivize buyers to come off the sidelines.”</em></p></blockquote>
<p>Here’s a look at the latest data for the three biggest factors that affect home affordability: <a href="https://www.simplifyingthemarket.com/2024/04/10/should-i-move-with-todays-mortgage-rates/" rel="noopener noreferrer" target="_blank">mortgage rates</a>, <a href="https://www.simplifyingthemarket.com/2024/03/13/your-home-is-a-powerful-investment/" rel="noopener noreferrer" target="_blank">home prices</a>, and wages.</p>
<h4><strong>1. Mortgage Rates</strong></h4>
<p>Mortgage rates have been volatile this year – bouncing around in the upper 6% to low 7% range. That’s still quite a bit higher than where they were a couple of years ago. But there is a sliver of good news.</p>
<p>Despite the recent volatility, rates are still lower than they were last fall when they reached <a href="https://www.freddiemac.com/pmms/archive" rel="noopener noreferrer" target="_blank">nearly 8%</a>. On top of that, most experts still think they’ll come down some over the course of the year. A recent article from <em>Bright MLS</em> <a href="https://www.prnewswire.com/news-releases/bright-mls-march-2024-housing-report-mid-atlantic-inventory-increases-for-the-second-month-in-a-row-302113312.html#:~:text=Mortgage%20rates%20will%20stay%20higher,more%20sellers%20into%20the%20market." rel="noopener noreferrer" target="_blank">explains</a>:</p>
<blockquote><p><em>“</em><strong><em>Expect rates to come down in the second half of 2024 but remain above 6% this year.</em></strong><em> Even a modest drop in rates will bring both more buyers and more sellers into the market.”</em> </p></blockquote>
<p>Any drop in <a href="https://www.simplifyingthemarket.com/2024/03/26/whats-the-latest-with-mortgage-rates/" rel="noopener noreferrer" target="_blank">rates</a> can make a difference for you. When rates go down, you can afford the home you really want more easily because your monthly payment would be lower.</p>
<h4><strong>2. Home Prices</strong></h4>
<p>The second big <a href="https://www.goldmansachs.com/intelligence/pages/us-home-prices-forecast-to-climb-as-mortgage-rates-fall-in-2024.html" rel="noopener noreferrer" target="_blank">factor</a> to think about is <a href="https://www.mba.org/news-and-research/forecasts-and-commentary/mortgage-finance-forecast-archives" rel="noopener noreferrer" target="_blank">home prices</a>. Most <a href="https://www.zillow.com/research/2024-housing-predictions-33447/" rel="noopener noreferrer" target="_blank">experts project</a> they’ll keep <a href="https://www.fanniemae.com/media/50801/display" rel="noopener noreferrer" target="_blank">going up</a> this year, but at a more normal pace. That’s because there are <a href="https://www.simplifyingthemarket.com/2024/03/28/is-it-easier-to-find-a-home-to-buy-now/" rel="noopener noreferrer" target="_blank">more homes</a> on the market this year, but still not enough for everyone who wants to buy one. The graph below shows the <a href="https://www.freddiemac.com/research/forecast/20240320-us-economy-remains-robust" rel="noopener noreferrer" target="_blank">latest</a> 2024 home price <a href="https://pulsenomics.com/surveys/" rel="noopener noreferrer" target="_blank">forecasts</a> from seven different <a href="https://cdn.nar.realtor/sites/default/files/documents/forecast-q1-2024-us-economic-outlook-01-26-2024.pdf" rel="noopener noreferrer" target="_blank">organizations</a>:</p>
<p> <a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240416/20240418-2024-Home-Price-Forecasts.png" rel="noopener noreferrer" target="_blank"><img alt="No Caption Received" decoding="async" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240416/20240418-2024-Home-Price-Forecasts.png"/></a></p>
<p></p>
<p>These forecasts are actually good news for you because it means the prices aren’t likely to shoot up sky high like they did during the pandemic. That doesn’t mean they’re going to fall – they’ll just rise at a slower pace.</p>
<h4><strong>3. Wages</strong></h4>
<p>One factor helping affordability right now is the fact that wages are rising. The graph below uses <a href="https://fred.stlouisfed.org/series/CES0500000017" rel="noopener noreferrer" target="_blank">data</a> from the <em>Federal Reserve</em> to show how wages have been growing over time:</p>
<p> <a href="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240416/20240418-Wages-Climbing-at-a-Faster-Pace.png" rel="noopener noreferrer" target="_blank"><img alt="No Caption Received" decoding="async" src="https://files.keepingcurrentmatters.com/KeepingCurrentMatters/content/images/20240416/20240418-Wages-Climbing-at-a-Faster-Pace.png"/></a></p>
<p></p>
<p>Check out the blue dotted line. That shows how wages typically rise. If you look at the right side of the graph, you’ll see wages are climbing even faster than normal right now.</p>
<p>Here’s how this helps you. If your income has increased, it’s easier to afford a home because you don’t have to spend as big of a percentage of your paycheck on your monthly mortgage payment.</p>
<h3>Bottom Line</h3>
<p>If you stack these factors up, you’ll see mortgage rates are still projected to come down a bit later this year, home prices are going up at a more moderate pace, and wages are growing quicker than normal. Those trends are a good sign for your ability to afford a home.</p>
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