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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7006 E Jensen Street, Mesa 85207, Moondance Townhomes

  • $219,500
  • Bedrooms: 3, Baths: 2
  • Home size: 1,700
  • Lot size: 4,235
  • Year built: 1996
  • MLS #: 5698060
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2301 E University Drive, Mesa 85213, East Brook

  • $130,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,118
  • Lot size: 717
  • Year built: 1985
  • MLS #: 5696418
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2741 S Equestrian Drive, Gilbert 85295, Val Vista Classic Parcel 2 Condominium Amd

  • $220,000
  • Bedrooms: 3, Baths: 2.5
  • Home size: 1,330
  • Lot size: 1,083
  • Year built: 2008
  • MLS #: 5697638
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6326 E Adobe Road, Mesa 85205, Dreamland Villa 15

  • $214,999
  • Bedrooms: 3, Baths: 3
  • Home size: 2,044
  • Lot size: 7,488
  • Year built: 1974
  • MLS #: 5691443
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5851 E Norwood Street, Mesa 85215, Loma Villa

  • $185,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,200
  • Lot size: 4,125
  • Year built: 1989
  • MLS #: 5695402
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441 S Maple Street, Mesa 85206, Windsor Shadows Lot 1-164 TR A-D

  • $199,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,242
  • Lot size: 4,283
  • Year built: 1990
  • MLS #: 5698387
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1051 S Dobson Road, Mesa 85202, Continental Townhouses East Unit 1

  • $164,900
  • Bedrooms: 3, Baths: 2
  • Home size: 1,289
  • Lot size: 1,311
  • Year built: 1974
  • MLS #: 5699192
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8240 E Obispo Avenue, Mesa 85212, Boulder Creek Unit 1

  • $224,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,655
  • Lot size: 7,967
  • Year built: 1997
  • MLS #: 5671168
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443 W 1st Avenue, Mesa 85210, Mesa

  • $193,500
  • Bedrooms: 4, Baths: 2
  • Home size: 1,584
  • Lot size: 6,625
  • Year built: 1915
  • MLS #: 5699009
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510 N Alma School Road, Mesa 85201, Westbrook

  • $154,900
  • Bedrooms: 3, Baths: 2
  • Home size: 1,118
  • Lot size: 0
  • Year built: 1986
  • MLS #: 5699109
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1110 S Cerise --, Mesa 85208, Crismon Manor

  • $225,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,418
  • Lot size: 5,278
  • Year built: 1999
  • MLS #: 5699095
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11548 E Marguerite Avenue, Mesa 85208, Desert Village

  • $190,000
  • Bedrooms: 4, Baths: 2
  • Home size: 1,538
  • Lot size: 9,113
  • Year built: 1971
  • MLS #: 5680991
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221 E 7th Avenue, Mesa 85210, EL May Villa Amd

  • $205,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,568
  • Lot size: 7,741
  • Year built: 1952
  • MLS #: 5683031
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2733 W Jacinto Circle, Mesa 85202, Los Altos

  • $200,000
  • Bedrooms: 3, Baths: 2
  • Home size: 1,224
  • Lot size: 7,052
  • Year built: 1974
  • MLS #: 5679536
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921 S Val Vista Drive, Mesa 85204, Stonebridge Gardens Lot 1-183 TR A-H Pvt DR

  • $214,900
  • Bedrooms: 3, Baths: 2
  • Home size: 1,208
  • Lot size: 4,046
  • Year built: 1992
  • MLS #: 5698147
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ARMLS Listing Data last updated 12/18/2017 11:34 AM MST.

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