Important Distinction: Homes Are Less Affordable, Not Unaffordable

Dated: October 21 2021

Views: 5

Important Distinction: Homes Are Less Affordable, Not Unaffordable

Important Distinction: Homes Are Less Affordable, Not Unaffordable | MyKCM

It’s impossible to research the subject of buying a home without coming across a headline declaring that the fall in home affordability is a crisis. However, when we add context to the most recent affordability statistics, we soon realize that, though homes are less affordable than they have been over the last few years, they are more affordable than they historically have been.

Black Knight, a premier provider of data and analytics for the mortgage industry, just released their latest Monthly Mortgage Monitor which includes a new analysis of the affordability situation. Here’s what the report reveals:

“The monthly payment required to purchase the average priced home with a 20% down 30-year fixed rate mortgage increased by nearly 20% (+$210) over the first nine months of 2021, . . . It now requires 21.6% of the median household income to make the monthly mortgage payment on the average home purchase, the least affordable housing has been since 30-year rates rose to nearly 5% back in late 2018.”

Basically, the report shows that homes are less affordable today than at any other time in the last three years. However, in a previous report earlier this year, Black Knight calculated that the percentage of the median household income to make the monthly mortgage payment on the average home purchase over the last 25 years was 23.6% (see graph below):Important Distinction: Homes Are Less Affordable, Not Unaffordable | MyKCMToday’s payment-to-income ratio is more affordable than the average over the last 25 years. Given that context, we can see that American households still have the same ability to be homeowners as their parents did 20 years ago.

This confirms the recent analysis of ATTOM Data resources where Todd Teta, Chief Product and Technology Officer, explains:

“The typical median-priced home around the U.S. remains affordable to workers earning an average wage, despite prices that keep going through the roof. Super-low interests and rising pay continue to be the main reasons why.”

Bottom Line

It’s true that it’s less affordable to buy a home today than it has been the last few years. However, it’s more affordable to buy today than the average over the last 25 years. In other words, homes are less affordable, but they’re not unaffordable. That’s an important distinction.

local-realty-blog-logo

Blog author image

Ryan Braswell

Ryan Braswell is an energetic, knowledgeable, and professional real estate broker. Licensed since 2012 Ryan has seen just about every type of market. His experience and knowledge are guaranteed to he....

Latest Blog Posts

Retirement May Be Changing What You Need in a Home

Retirement May Be Changing What You Need in a HomeThe past year and a half brought about significant life changes for many of us. For some, it meant entering retirement earlier than expected. Recent

Read More

Why a Wave of Foreclosures Is Not on the Way

Why a Wave of Foreclosures Is Not on the WayWith forbearance plans coming to an end, many are concerned the housing market will experience a wave of foreclosures similar to what happened after the

Read More

The Mortgage Process Doesn’t Have To Be Scary [INFOGRAPHIC]

The Mortgage Process Doesn’t Have To Be Scary [INFOGRAPHIC]Some HighlightsApplying for a mortgage is a big step towards homeownership, but it doesn’t need to be one you fear. Here

Read More

Does Your House Have What Buyers Want?

Does Your House Have What Buyers Want?The rise in remote work is changing what many Americans want in their homes. Many companies are choosing to delay reopening or go remote full-time,

Read More
Fair Housing Icon NY Fair Housing Notice