Beyond Mortgage Rates: The 3 Surprising Factors Shaping Home Affordability Today

The current state of home affordability is not just based on mortgage rates, but also on home prices and wages. Although mortgage rates have climbed since their pandemic-era record lows, they have remained relatively stable for the past eight months, hovering between 6% and 7%. Home prices, on the other hand, have varied by market, with some areas seeing slight declines while others continue to climb. However, rising wages are currently the most positive factor in affordability, as higher income reduces the percentage of one’s paycheck needed to cover monthly housing costs. To get a better understanding of how these factors work together in your local market, it’s best to consult with a trusted real estate agent.

Trying To Buy a Home? Hang in There.

We’re still in a sellers’ market. And if you’re looking to buy a home, that means you’re likely facing some unique challenges, like difficulty finding a home and volatile mortgage rates. But keep in mind, there are some benefits to being a buyer in today’s market that give you good reason to stick with your search. Here are a few of them.

Long-Term Benefits Outweigh Short-Term Challenges

Owning a home grows your net worth – and since building that wealth takes time, it makes sense to start as soon as you can. If you wait to buy and keep renting, you’ll miss out on those monthly housing payments going toward your home equity. Freddie Mac puts it this way:

How Changing Mortgage Rates Can Affect You

The 30-year fixed mortgage rate has been bouncing between 6% and 7% this year. If you’ve been on the fence about whether to buy a home or not, it’s helpful to know exactly how a 1%, or even a 0.5%, mortgage rate shift affects your purchasing power.

The chart below helps show the general relationship between mortgage rates and a typical monthly mortgage payment: