There is a lot of discussion about the current state of housing affordability for both first-time and move-up buyers, and much of the narrative is tarnished with a negative slant. However, the truth is that housing affordability is better today than at almost any time in our history.
The naysayers are correct in the fact that affordability today is not as good as it has been over the last several years. But, we must remember that home prices collapsed during the housing crash, and distressed properties (foreclosures and short sales) kept home values depressed for years. When we compare affordability to the decades that proceeded the crash, a different story is revealed.
Here is a graph of the National Association of Realtors’ Housing Affordability Index. The higher the graph, the more affordable homes are.
We can see that affordability is better today than in the fifteen years prior to the boom and bust.
It reveals that, though a ‘typical’ housing payment was less expensive in 2012 (remember distressed properties), it is currently less expensive than it was in 2000 and is still projected to be lower next year than it was in 2000.
Mark Fleming, Chief Economist at First American, explained it best:
“While borrowing power for the potential home buyer has fallen relative to the low point of 2012, it remains high today and will remain high next year, relative to the long run average. If you don’t want to rent anymore and are considering becoming a homeowner, even if mortgage rates rise next year, your borrowing power will remain strong by historic standards.”
Author:Frank Provencal Phone: 207-710-9493 Dated: December 1st 2017 Views: 21 About Frank: Frank Provencal has over 20 years of combined public service with the Maine Department of Correction...
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"Janet and I would like to take this time and really appreciated the hard work David Marshall put into getting our former home in Portland, ME at 127 Fenway Street on the market. He worked extremely hard to get the home sold for us. Dave is very knowledgeble and comes across as a straight shooter and we are thankful for his honesty. He is very hard worker and makes sure all of the T's are crossed and the I's are dotted. He kept us updated on the process and timelines we had to make and paperwork that needed to be completed in a timely fashion. Not only have we found a Realtor® we would count on again, but a friend as well. He is one of a kind. Thank you Dave for a great job well done."