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Mortgage Rates And Affordability Outlook February 2014
As homeowners have regained equity in their existing homes, it’s given them the confidence to start looking for new properties rather than simply modifying their existing houses. This also increases the number of available homes on the market, creating more pricing competition. A steadily lowering unemployment rate, which Freddie Mac predicts will drop below 7 percent by midyear, contributes to buyer confidence. Signs indicate the economy is rebounding as well. Combined with mortgage rates that are still extremely low and a projected rise in new housing starts, housing affordability is relatively high.
What Is Housing Affordability?
The National Association of REALTORS® tracks whether a typical family earns enough income to qualify for a home loan for a typical home, based on median home prices, median family income and average mortgage interest rates. Currently rates are still at historic lows while home prices remain affordable in most areas. As the economy improves and the unemployment number decreases, incomes rise and more Americans can afford to purchase a new home.
What’s the Rush?
That’s just it—more Americans can afford a new home. While more homes will come on the market, competition for available desirable homes in desirable areas will increase. When this happens, the laws of supply and demand indicate that housing prices will rise. We’ve already seen the slow creep of mortgage interest rates, and there’s no indication the trend will halt or even slow down this year. Real estate analysis company Clear Capital has noted a rise in home prices already in most of the 276 cities it tracks (although homes continue to be affordable in most areas). With these costs predicted to continue to rise by most experts, it appears that purchasing a new home now is a smart way to start off the New Year.
Jumping into the housing market now will help you save money on both the cost of the home and on your mortgage loan. Remember, even a one percent rise in mortgage rates will affect your purchasing power, and as home prices also rise, you may not be able to afford the home you really want. I can show you what you can afford and help you get started on the path to a new home purchase. Contact me today and we can review your finances and get you moving toward a great deal on a brand new home.
Debbi has over 18 years’ experience as a Real Estate Broker. She can provide top notch personalized service, whether you are a first time home buyer or looking for a luxury home or investment proper....
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