July 2011 Housing Affordability

The housing market still faces many challenges. Unemployment, foreclosures and other distress sales are keeping negative pressure on prices. Of course, this is good news if you are a buyer ready to buy...low mortgage rates and low prices have brought affordability to record levels.

How affordable is housing today? Since 1963, it has cost an average of approximately 43% of per capita (or individual income) to finance the cost of a median priced home (20% down payment with a 30 year fixed rate mortgage). Right now, it's only about half of that cost at about 22%.

You won't find this little history lesson in the news because the news is about the moment and the more dramatic the better. Taking a rational, longer term view of things makes more sense and is particularly true when it comes to a home that is usually owned for years rather than days or months.

Smart buyers are using this affordability advantage to strike the best possible deal on a home today. People are still moving to Dallas and whether they are buying or leasing, they all need a place to live. [where: 75230]