Low Housing Costs for Recent Buyers

Everyone is aware that right now we’re seeing the lowest mortgage rates in a generation or two. Everyone is probably also mindful of the bargain prices. Due to inflation over time, people’s income generally rises over time, though the average family income stopped growing in 2009. So how do these facts add up in relation to the budget devoted to housing payments for recent buyers? Well, a typical family with middle income would be devoting less than 15% of their pre-tax income on mortgage payments to buy a typical home in the U.S. Furthermore, a family buying a home today would lock-in a fixed monthly payment for the long haul if taking out a 30-year fixed rate mortgage. Prices of just about everything can be expected to rise, along with income, but not mortgage payments. It is no wonder why homebuyers of the past 2-3 years have been some of the most successful, with extremely low default rates.

Here are the graphs that you may want to share with your clients:

(1) Average mortgage rates
(2) Median home price
(3) Family income
(4) Mortgage payment to buy a median priced home with a 20 percent down
(5) Monthly mortgage payment in relation to income

Lawrence Yun, PhD., Chief Economist and Senior Vice President

Lawrence Yun is Chief Economist and Senior Vice President of Research at NAR. He directs research activity for the association and regularly provides commentary on real estate market trends for its 1 million REALTOR® members.

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  1. j farley

    good article

  2. It would be interesting to see these charts across varying price ranges and income levels. For example what would the chart look like when analyzing the $200,000+ income and $500,000+ home market?