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    Homes More Affordable Today than 1985-2000

    Homes More Affordable Today than 1985-2000 | MyKCM

    Rising home prices have many concerned that the average family will no longer be able to afford the most precious piece of the American Dream – their own home.

    However, it is not just the price of a home that determines its affordability. The monthly cost of a home is determined by the price and the interest rate on the mortgage used to purchase it.

    Today, mortgage interest rates stand at about 4.5%. The average annual mortgage interest rate from 1985 to 2000 was almost double that number, at 8.92%. When comparing affordability of homeownership over the decades, we must also realize that incomes have increased.

    This is why most indexes use the percentage of median income required to make monthly mortgage payments on a typical home as the point of comparison.

    Zillow recently released a report comparing home affordability over the decades using this formula. The report revealed that, though homes are less affordable this year than last year, they are more affordable today (17.1%) than they were between 1985-2000 (21%). Additionally, homes are more affordable now than at the peak of the housing bubble in 2006 (25.4%). Here is a chart of these findings:

    Homes More Affordable Today than 1985-2000 | MyKCM

    What will happen when mortgage interest rates rise?

    Most experts think that the mortgage interest rate will increase to about 5% by year’s end. How will that impact affordability? Zillow also covered this in their report:

    Homes More Affordable Today than 1985-2000 | MyKCM

    Rates would need to approach 6% before homes became less affordable than they had been historically.

    Bottom Line

    Though homes are less affordable today than they were last year, they are still a great purchase while interest rates are below the 6% mark.

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    Carin Nguyen

    Carin Nguyen takes the business of real estate very seriously and she has the track record to prove it. She holds the recent prestigious title and ranking of the #1 realtor in AZ for sides as awarded by the Wall Street Journal. Carin is an Arizona native and fully understands the complexities and changing landscape of the Arizona market. She has been in the real estate industry for over 10 year’s full time and comes by her expertise honestly, having honed it during years in the finance and mortgage industries. Education and knowledge is key in getting her buyers and sellers what they what. A rich resume built with a tireless commitment to her clients, undeniable proven past success and an uncompromised vision for the future create the recipe for complete customer satisfaction. Carin understands the potential emotional stress and sometimes life altering experiences felt by clients during the real estate transaction process. Carin is unyielding in insisting on complete professionalism from herself and her team while understanding that real estate is a personal business. She thrives on managing the details and individuality of each transaction and client. Her clients know that having Carin on their side means they have an advocate who cares about them and their needs. Carin is convinced that building relationships will ensure continued satisfaction and be reflected in future success. There is no denying what provides Carin with her constant strength. Her family is “at the heart of my motivation to push myself to achieve my goals and to be forthright in all that I do. My husband, Son, is my biggest source of support, my coach and my best friend. I am truly blessed with a loving husband and four great children who collectively strengthen my resolve to be the best at all my endeavors. I can be a wife and mother and still be a successful Realtor because I tackle everything with all that I have. My motto is ‘Working Hard To Get Homes Sold’ for a reason. I am thrilled that so many families have made me their real estate consultant.” A commitment to professionalism, an empathetic and understanding approach to her clients and an unstoppable and dependable force from her family all ensures success for Carin and most importantly, her clients

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