Important Distinction: "Homes Are Less Affordable", Not Unaffordable

Dated: October 21 2021

Views: 7

Important Distinction: Homes Are Less Affordable, Not Unaffordable

Important Distinction: Homes Are Less Affordable, Not Unaffordable | MyKCM

It’s impossible to research the subject of buying a home without coming across a headline declaring that the fall in home affordability is a crisis. However, when we add context to the most recent affordability statistics, we soon realize that, though homes are less affordable than they have been over the last few years, they are more affordable than they historically have been.

Black Knight, a premier provider of data and analytics for the mortgage industry, just released their latest Monthly Mortgage Monitor which includes a new analysis of the affordability situation. Here’s what the report reveals:

“The monthly payment required to purchase the average priced home with a 20% down 30-year fixed rate mortgage increased by nearly 20% (+$210) over the first nine months of 2021, . . . It now requires 21.6% of the median household income to make the monthly mortgage payment on the average home purchase, the least affordable housing has been since 30-year rates rose to nearly 5% back in late 2018.”

Basically, the report shows that homes are less affordable today than at any other time in the last three years. However, in a previous report earlier this year, Black Knight calculated that the percentage of the median household income to make the monthly mortgage payment on the average home purchase over the last 25 years was 23.6% (see graph below):Important Distinction: Homes Are Less Affordable, Not Unaffordable | MyKCMToday’s payment-to-income ratio is more affordable than the average over the last 25 years. Given that context, we can see that American households still have the same ability to be homeowners as their parents did 20 years ago.

This confirms the recent analysis of ATTOM Data resources where Todd Teta, Chief Product and Technology Officer, explains:

“The typical median-priced home around the U.S. remains affordable to workers earning an average wage, despite prices that keep going through the roof. Super-low interests and rising pay continue to be the main reasons why.”

Bottom Line

It’s true that it’s less affordable to buy a home today than it has been the last few years. However, it’s more affordable to buy today than the average over the last 25 years. In other words, homes are less affordable, but they’re not unaffordable. That’s an important distinction.

Blog author image

Nanci Gilbert, PA

Nanci strives to provide every client with a smooth and worry-free experience when it comes to buying and selling real estate. In an industry that can move very quickly, she prides herself on taking t....

Latest Blog Posts

Why It Just Became Much Easier To Buy a Home"

Why It Just Became Much Easier To Buy a HomeSince the pandemic began, Americans have reevaluated the meaning of the word home. That’s led some renters to realize the many benefits of

Read More

Win When You Sell, And When You Move

Win When You Sell (And When You Move)If you’re trying to decide when to sell your house, there may not be a better time than this winter. Selling this season means you can take

Read More

A Checklist for Selling Your House This Winter"

A Checklist for Selling Your House This Winter Some HighlightsIf you’re planning to sell your house this winter, you’ll want it to look its best inside and out.Take the

Read More

Tips for Single Homebuyers: How To Make Your Dream a Reality"

Tips for Single Homebuyers: How To Make Your Dream a RealityIf you’re living on your own and looking to buy a home, know that you can make your dream a reality with thoughtful

Read More