Taking Advantage of Homebuying Affordability in Today’s Market
Brent Wells July 9, 2020
Brent Wells July 9, 2020
Everyone is ready to buy a home at different times in their lives, and despite the health crisis, today is no exception. Understanding how affordability works and the main market factors that impact it may help those who are ready to buy a home narrow down their optimal window of time to make a purchase.
There are three main factors that go into determining how affordable homes are for buyers:
The National Association of Realtors (NAR), produces a Housing Affordability Index, which takes these three factors into account and determines an overall affordability score for housing. According to NAR, the index:
“…measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home at the national and regional levels based on the most recent price and income data.”
Their methodology states:
“To interpret the indices, a value of 100 means that a family with the median income has exactly enough income to qualify for a mortgage on a median-priced home. An index above 100 signifies that family earning the median income has more than enough income to qualify for a mortgage loan on a median-priced home, assuming a 20 percent down payment.”
So, the higher the index, the more affordable it is to purchase a home. Here’s a graph of the index going back to 1990:
The green bar represents today’s affordability. We can see that homes are more affordable now than they have been at any point since the housing crash when distressed properties (foreclosures and short sales) dominated the market. Those properties were sold at large discounts not seen before in the housing market.
Although there are three factors that drive the overall equation, the one that’s playing the largest part in today’s homebuying affordability is historically low mortgage rates. Based on this primary factor, we can see that it is more affordable to buy a home today than at any time in the last seven years.
If you’re considering purchasing your first home or moving up to the one you’ve always hoped for, it’s important to understand how affordability plays into the overall cost of your home. With that in mind, buying while mortgage rates are as low as they are now may save you quite a bit of money over the life of your home loan.
If you feel ready to buy, purchasing a home this season may save you significantly over time based on historic affordability trends. Let’s connect today to determine if now is the right time for you to make your move.
Stay up to date on the latest real estate trends.
If you're not already familiar with the Celina story, the numbers speak for themselves.
EV-Ready Living. Light Farms offers electric car charging stations within the community.
Buying a new construction home is a fundamentally different process than buying a resale property.
You’re clearing multiple rooms, a garage, attic, shed, or light remodel debris.
You find yourself only using part of the house while the rest collects dust.
Keeping the same flooring throughout the main living areas helps create a smooth, cohesive flow.
Overpricing, even by a little, can cause a listing to sit stale — which often leads to price drops.
Every week I am visiting with many new homes sales associates and I am hearing a consistent story.
North Sky is a June 2025 favorite, with new contemporary homes featuring open layouts and smart tech.
We'd love to hear from you! Whether you're buying, selling, or just exploring your options, we're here to provide answers, insights, and the support you need. Contact us and start planning your next move.
