The most recent index metric was published last week by the National Association of Realtors’ [NAR] Housing Affordability Index.
Housing affordability declined from a year ago in December moving the index down 8.4% from 161.2 to 147.6. The median sales price for a single family home sold in December in the US was $256,400 up 3.4% from a year ago.
The demand for new housing will obviously be the single-biggest factor with respect to keeping housing affordable, coupled with a
strong economic climate and reasonable mortgage rates.
“Housing affordability will be the key to sustained healthy growth in the housing market in the upcoming years,” stated NAR Chief Economist Lawrence Yun.
Currently, according to the report, the monthly mortgage rate came in unchanged from November at 4.99%. This compares with the median family income which was up to $77,940 from $77,216 in November, according to the report. As stated earlier, climbing mortgage rates will continue to impact the ability of Millennials entering into the market, as the average family currently pays 17.1% of family’s income towards rent or a mortgage in 2018; this compares to 15.8% in 2017 and 15% in 2016.
Based upon the current figures, to purchase a single-family home at the national median price, a family will need an overall income of $62,954 to make a 5% down payment. The purchase of a home with a 10% down payment requires an income of $59,640; and a 20% down payment will further reduce the necessary annual income to just $53,013.
Experts predict that, even as the current streak of fast home value growth reaches its peak, affordability will continue to be a problem for first-time and lower-income homebuyers.
The experts see the market requiring approximately 15 million new homes to be constructed in order to satisfy the demand. Presently, new housing starts fell short of historically normal levels, adding only 9.6 million new housing units added in the past decade. As the report shows, home values will continue to trend higher until inventory increases.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.