Low mortgage rates and stabilizing incomes are keeping home affordability high and giving home buyers “ample buying power,” according to the National Association of REALTORS®.
The Wall Street Journal highlights the following example on just how affordable housing has become: “Assuming a 5 percent down payment, a 3.5 percent mortgage rate, and 25 percent of a gross income devoted to mortgage payments, a buyer would only need an income of $36,500 to buy a house at the median price. With a 10 percent down payment, the required salary falls to $34,600, and with a 20 percent down payment, it falls to $30,700.”
In the first quarter, the median family income nationwide was $62,200.
Housing affordability remains high despite recent reports that show home prices in 150 U.S. cities saw their biggest year-over-year gains in more than seven years, according to NAR’s most recent report, reflecting data from the first quarter of 2013. The median price of a single-family, existing home was $176,600 in the first quarter of this year, an increase of 11.3 percent from year ago levels, NAR notes.
Areas with strong job growth are posting some of the largest home price gains, including:
• Akron, Ohio: +32.7%
• San Francisco By area: +32.6%
• Reno-Sparks, Nev.: +32.1%
• Silicon Valley area surrounding San Jose, Calif.: +31.7%
• Atlanta: +31.1%
• Phoenix: +30.1%
Source: “Home Prices Jump but Affordability Remains in Buyers’ Favor,” The Wall Street Journal