Home prices can be deceiving. After all, the sales price of a home isn’t really the number that matters most to a prospective home buyer. The monthly mortgage payment is, and it depends on a number of different factors, including property tax, mortgage rates, down payment, mortgage insurance, etc. In other words, when thinking about how much house you can afford, it’s best to take everything into consideration, not just the sticker price. That’s why a new analysis is good news for homebuyers concerned about affordability.
According to the numbers, released by a popular online real estate portal, the typical mortgage payment has become more affordable over the past two years. In fact, homeowners earning the median income could cover the monthly payment on the typical U.S. home in September with 17.5 percent of their earnings. That’s down over two percent from two years ago.
That means, despite the fact that home prices have continued to rise, the drop in mortgage rates – which are considerably lower than they were in October 2018 – has helped make mortgage payments more affordable. (source)