2 Charts That Show the Truth about Home Affordability

2 Charts That Show the Truth about Home Affordability | Simplifying The Market

There is a lot of discussion about the current state of housing affordability for both first-time and move-up buyers, and much of the narrative is tarnished with a negative slant. However, the truth is that housing affordability is better today than at almost any time in our history.

The naysayers are correct in the fact that affordability today is not as good as it has been over the last several years. But, we must remember that home prices collapsed during the housing crash, and distressed properties (foreclosures and short sales) kept home values depressed for years. When we compare affordability to the decades that proceeded the crash, a different story is revealed.

Here is a graph of the National Association of Realtors’ Housing Affordability Index. The higher the graph, the more affordable homes are.

2 Charts That Show the Truth about Home Affordability | Simplifying The Market

We can see that affordability is better today than in the fifteen years prior to the boom and bust.

CoreLogic just published a report showing the National Homebuyers’ “Typical Mortgage Payment.” Here is a graph of their findings:

2 Charts That Show the Truth about Home Affordability | Simplifying The Market

It reveals that, though a ‘typical’ housing payment was less expensive in 2012 (remember distressed properties), it is currently less expensive than it was in 2000 and is still projected to be lower next year than it was in 2000.

Bottom Line

Mark Fleming, Chief Economist at First American, explained it best:

“While borrowing power for the potential home buyer has fallen relative to the low point of 2012, it remains high today and will remain high next year, relative to the long run average. If you don’t want to rent anymore and are considering becoming a homeowner, even if mortgage rates rise next year, your borrowing power will remain strong by historic standards.”

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1502 S Lee Circle, Mesa 85204, Casa Mesa 4

  • $175,900
  • Bedrooms: 4, Baths: 3
  • Home size: 1,536
  • Lot size: 6,652
  • Year built: 1971
  • MLS #: 5720016
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812 S Matlock Circle, Mesa 85204, Poinsettia Villa 3

  • $225,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,636
  • Lot size: 12,192
  • Year built: 1961
  • MLS #: 5721986
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9966 E Dragoon Circle, Mesa 85208, Wynstone Park

  • $210,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,192
  • Lot size: 6,399
  • Year built: 1997
  • MLS #: 5718017
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1806 W 5th Street, Mesa 85201, Mesa Vista Amd Lots 136-149, 158-197

  • $220,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,645
  • Lot size: 6,983
  • Year built: 1957
  • MLS #: 5724272
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2537 E Baltimore Street, Mesa 85213, Mesa Villas Replat

  • $219,900
  • Bedrooms: 3, Baths: 2
  • Home size: 1,250
  • Lot size: 7,012
  • Year built: 1975
  • MLS #: 5725830
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1510 W 6th Street, Mesa 85201, North Garden Grove

  • $200,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,449
  • Lot size: 7,897
  • Year built: 1959
  • MLS #: 5720518
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9312 E Osage Avenue, Mesa 85212, Mesquite Canyon 1

  • $223,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,307
  • Lot size: 5,000
  • Year built: 1999
  • MLS #: 5726722
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9233 E Neville Avenue, Mesa 85209, Park Central AT Augusta Ranch Condominium 2ND Amd

  • $190,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,230
  • Lot size: 838
  • Year built: 2002
  • MLS #: 5726711
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7654 E Plata Avenue, Mesa 85212, Sossaman Estates

  • $215,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,472
  • Lot size: 6,329
  • Year built: 1998
  • MLS #: 5726067
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1650 S Crismon Road, Mesa 85209, Augusta Casitas Amd

  • $209,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,391
  • Lot size: 3,182
  • Year built: 2002
  • MLS #: 5726207
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10046 E Crescent Avenue, Mesa 85208, Parkwood Ranch

  • $210,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,370
  • Lot size: 5,105
  • Year built: 2003
  • MLS #: 5714888
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1650 S Crismon Road, Mesa 85209, Augusta Casitas Amd

  • $205,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,391
  • Lot size: 2,960
  • Year built: 2002
  • MLS #: 5726898
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3308 E El Moro Avenue, Mesa 85204, Countryside Estates Unit 2 Lot 101-262

  • $208,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,292
  • Lot size: 7,235
  • Year built: 1971
  • MLS #: 5718415
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10105 E Carmel Avenue, Mesa 85208, Sunrise AT Parkwood Ranch

  • $225,000
  • Bedrooms: 3, Baths: 2.5
  • Home size: 1,560
  • Lot size: 3,713
  • Year built: 2001
  • MLS #: 5726874
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3571 E Thunderheart Trail, Gilbert 85297, San Tan Ranch Parcel 2

  • $219,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,204
  • Lot size: 7,253
  • Year built: 1999
  • MLS #: 5726808
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ARMLS Listing Data last updated 2/23/2018 5:05 AM MST.

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