Can You Afford to Buy a Home Today? The Answer Might Surprise You...

Dated: October 21 2021

Views: 0

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.

Blog author image

Ramon Renteria Jr

Ramon Renteria is an Associate Broker with eXp Realty and is part of the Tesoro Team at eXp Realty. Prior to real estate, Ramon worked at USAA serving and assisting military members with their insuran....

Latest Blog Posts

Selling Your House This Winter? You Must See Our Checklist!

Some HighlightsIf you’re planning to sell your house this winter, you’ll want it to look its best inside and out.Take the time and focus on tasks that make it inviting, show it’s

Read More

Should I Use a Realtor When Buying a Newly Constructed Home? You Decide...(part 1)

Purchasing new construction is usually more complicated and intimidating than buying a resale home. It is important with a new-home purchase that a buyer hire a real estate agent to represent them

Read More

Should You Use A Realtor When Buying A Newly Constructed Home? You Decide...(part 1)

Purchasing new construction is usually more complicated and intimidating than buying a resale home. It is important with a new-home purchase that a buyer hire a real estate agent to represent them

Read More

The Journey of Homeownership!

Some HighlightsWhen it comes to buying a home, there are a number of key milestones along the way.The process includes everything from building your team and understanding your finances to going

Read More