Apr 3, 2011

Dallas Housing Affordability in 2011

I keep telling folks that this is a great time to buy because homes are so affordable right now. But a lot of people don't think about affordability or get the difference between cost and price. They think prices could drop more and thus the house they want to buy will cost less. That isn't likely because interest rates and inflation rates have a big effect on the true cost of buying a house. And both are on their way up.

Affordability is an important factor to consider. Since 1963, it has cost the typical American an average of 43% of 'per capita' (or individual income) to finance the cost of a median priced home. That takes into consideration a typical 20% down payment and a 30 year fixed rate mortgage. Today, it's about about half of that cost at approximately 22% of individual income. Homes are simply more affordable, which is why so many people have jumped into the market over the past few years. As we know, some of those people shouldn't have. But should you now?

The housing market still faces many challenges, but Dallas is doing better than most areas. High unemployment and distress sales are keeping prices down. This of course is good news if you are looking to buy since the low mortgage rates and low prices have brought affordability to record levels. Who knows what will happen with interest rates, inflation and home prices tomorrow?  [where: 75230]

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