When you read that headline, you think THE WORLD IS ENDING! But, it’s not. Housing is STILL affordable, just not AS AFFORDABLE as it was last year.
What does this mean? It means that home prices are increasing above the rate of inflation and that mortgage rates are on the rise. Are buyers buying homes? YES! Will buyers be buying homes 6 months from now? YES!
In fact, homes sales are increasing since last year even with this lower housing affordability whatnot going on. It appears that buyers are the least bit put out by this news. What they are put out by is that they are NOT ENOUGH HOMES ON THE MARKET – there is such a lack of homeowners selling their home. This also helps to perpetuate the cycle of driving up home prices. Let’s use this one example of a recent home buyers transaction I had:
I was the buyer’s agent and my buyer clients wanted to purchase this “new construction” home. I say that in quotation marks because the sellers who truly did purchase the home as new construction were getting a divorce 6 months into living there. They hadn’t even properly graded the grounds and added in grass yet. They listed it for $20k higher than what they purchased it for 6 MONTHS AGO. Sure, there were appliances and a few painted walls, but that’s it. We made an offer, it was negotiated back and forth a bit and then it was settled. The appraisal came back just fine and my buyers moved in. They were super happy to get such a deal – but man, if we were only looking 6 months earlier!!