It has become more difficult to buy a house. Here are some options to consider if you’re struggling to find something in your price range.
It’s no secret that property prices have risen over the past year. We can say thank you competitively Mortgage rates, low stocks and high demand for it.
However, the latest index from the National Association of Home Builders and Wells Fargo Housing Opportunity confirms that home affordability declined in the first quarter of 2021. An estimated 63.1% of newly built and existing homes sold between early January and late March were affordable to families earning the median US income of $ 79,900. However, that’s a decrease from 63.3% of homes sold in the fourth quarter of 2020, which were considered affordable for buyers with the same median income.
Why are houses less affordable?
The low supply of housing has led to a spike in property prices in the last quarter because many homes for sale have ended up in Bidding wars. Here, competing buyers try to assert themselves on the same property, which drives up the selling price. Mortgage rates also rose in the first quarter of 2021, which contributed marginally to a decline in affordability.
It’s worth noting that mortgage rates were kept at competitive levels on a historical basis over the past quarter – they just didn’t hit the record lows we saw in the second half of 2020.
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In addition, a lack of wood has increased the cost of new buildings an average of about $ 36,000 more. Newly built homes are generally more expensive than existing ones, but now that gap may widen.
Dealing with limited affordability
Finding an affordable home is clearly more difficult than usual. So what can you do if you want to buy in this challenging market?
For one thing, sit down and wait for the apartment inventory to open. A big reason homes sell so high is because there just isn’t enough to buy. But if the pandemic situation improves, inventories could pick up later in the year. While mortgage rates may rise, they are unlikely to rise significantly in the next few quarters. Waiting until summer or fall to buy so might be a wise bet.
At the same time, you make yourself most attractive mortgage Having a potential candidate increases your chances of getting a low interest rate on your loan. And that alone could make any home you buy more affordable. In this regard, it is worth:
It’s a difficult time right now buy a house for people of all income levels. If you are an average earner, your options may be even more limited. But don’t despair – today’s real estate market is uniquely crowded with buyers, not to mention the lack of homes for sale. That could change in the course of the year. So stay tuned and work to make sure that you are an attractive mortgage candidate. This way you can pounce as soon as the inventory opens.