Buying a home is now more affordable than it has been in the last twenty years.
That is, according to this CNN article. Due to declines in home prices and nearly record-low mortgage rates, the National Association of Home Builders/Wells Fargo Housing Opportunity Index now registers a record level of affordability.
According to the index, 75.9% of all new and existing homes sold during the three months ended Dec. 31 could have been comfortably purchased by families earning the national median income of $64,200.
That was the highest percentage recorded in the 20-year history of the index, and a sharp increase from just three months earlier when 72.9% of all homes sold were considered affordable.
The National Association of Realtors reported that in January, home prices fell to their lowest point in more than a decade, which has helped to lift the pace of home sales. The median home price in January fell 2% from December to $154,700. That's the lowest since November 2001, before the run-up in home prices that eventually crashed the market.
The pace of sales rose to the highest level since May of 2010. The seasonally-adjusted annual sales pace of 4.57 million homes was up a bit from the revised 4.38 million in December. The last time homes sold at that pace, buyers were rushing in order to qualify for the $8,000 homebuyer's tax credit as it was about to expire.
Unfortunately, despite the affordability and apparent signs of recovery, most Americans are having trouble buying a home. The main reason is that potential home buyers are finding it extremely difficult to qualify for mortgages due to tightened lending standards. Borrowing troubles are even extended to successful builders.
Don't let this news discourage you. Those who can squeeze some money out of a bank will be able to take advantage of rates that have consistently hovered at or near record lows.
Here are three tips to help you buy a home:
- Seek out home buyer programs. Not all home buyer programs fell away with the economy, there are still plenty available if you are willing to live in the communities that offer them.
- Apply for mortgages as several banks. It may be discouraging after some banks turn you down, but some may make reasonable offers, too! Just keep trying.
- Don't bite off more than you can chew. If a bank makes an offer with too high of an amount or interest rate, move along - it'll cost you too much in the end to take on too much house or too much mortgage.
Make your move soon, though! The spring selling season is ramping up and the value of real estate in the Twin Cities is sure to rise. Additionally, the 30-year fixed mortgage rate just rose for the first time in four weeks. The increase from record lows is due to the news that the housing market is showing some signs of improvement.
Want help finding out if you could be a first time home buyer this year? Contact the Twin Cities Realtors at Barker & Hedges to learn more.