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Price Vs. Cost Of Home Ownership
September 18, 2019 at 12:45pm | Rima Rafeh
When home buying activity is on the rise and the supply is low, firms often increase their projections as the prices appreciate. In CoreLogic, they increased their yearly projection from 4.5% to almost 6% these past few months. Price appreciation of homes is always met with concerns about affordability. FirstAmerican published some data analysis that reveals price may not be the only be the market factor when determining of becoming a homeowner. These are their findings: Home Prices “In January 2019, a family with the median household income in the U.S. could afford to buy a $373,900 house. By August, that home had appreciated to $395,000, an increase of $21,100.”
“The 0.85 percentage point drop in mortgage rates from January 2019 through August 2019 increased affordability by 9.7%. That translates to a $40,200 improvement in house-buying power in just eight months.”
“As rates have fallen in 2019, the economy has continued to perform well also, resulting in a tight labor market and wage growth. Wage growth pushes household incomes upward, which were 1.5% higher in August compared with January. The growth in household income increased consumer house-buying power by 1.5%, pushing house-buying power up an additional $5,600.” Want to chat about current market trends? Contact me here.