Buyers today are focusing a lot on affordability. Interest rates are higher than they were a year ago, home prices are continuing to rise, and on top of that, cost of living prices are also going up steadily. So when we talk to a potential buyer, especially a first-time buyer, we talk a lot about how it’s possible to afford a home in this market.
So let’s break down the 3 things buyers are considering when it comes to affordability in the housing market right now:
What we’ve been seeing for the last 8 months is that rates have hovered between 6%-7% with some movement. And, experts predict that rates will continue to stay in that range in the near future. A small change of even 1% can affect your purchasing power so it’s important to work closely with your Realtor and Lender to stay up to date on the latest rates.
Perhaps the one good thing about the higher mortgage rates is that it has slowed down the appreciation of home prices. We saw a major increase over the last few years due to high demand and low supply. However, things are becoming more balanced which is leveling out home prices as well. Something to keep in mind is that home prices and appreciation really vary by location and market depending on a number of factors. This is another great reason to have your Realtor work for you in letting you know which areas are more affordable and right for your budget.
Finally, something positive to talk about when it comes to home affordability. Wages are going up across the country. Here in Colorado, our minimum wage has reached $13.65 per hour. With wages rising and home prices leveling off or slowing down in appreciation, this is great news for those who have been looking to buy.
We are hearing over and over that buyers just want to wait until interest rates go down, or until the supply of homes increases. While this logic of thinking is certainly understandable, it may not be realistic. Experts are sharing no indication that home prices will drop or that the housing “bubble” will pop.
If you’ve been thinking about buying but haven’t made the move just yet because of prices, here are a few ways to help you afford a home today:
- Expand your search area
- Work with an experienced lender to use alternative financing options
- Consider downpayment assistance
- Reassess your must-have home list
- Budget and start saving early
If you’re ready to start your home-buying journey, give us a call! We would love to help you find your perfect home in Longmont and Northern Colorado.