When thinking about housing affordability over time, often the first thing that comes to mind is how much cheaper homes were in the past. However, when we take a look at actual data, we get a much more complete picture of historical housing market trends.
There’s no doubt that home prices have appreciated drastically over the last 40 years. But it’s important to keep in mind that so have prices for almost everything else — this is just basic inflation. When analyzing housing trends, we must take into account that price is only one factor comprising the monthly cost of a home. Another huge factor, for example, is the monthly mortgage rate at time of purchase.
The graph above uses mortgage amount, mortgage rate, principal and interest (P&I), and an inflation formula to determine whether homes were more or less affordable in the subject years than in 2021.
As you can see, with inflation adjustments, 2010 and 2020 were the only two times in the past nearly 40 years when it was less expensive to buy a home than it is today.
If you are ready to make the jump to homeownership or are looking for your next dream house, contact your local Surterre agent at SurterreProperties.com today to get started.
Source: Keeping Current Matters
