Data shows that you can afford a more expensive property in 2020 than in 2019.
With housing prices so high and interest rates so low, will you still get a better deal on a home this year than you would have last year?
According to the financial data experts from CoreLogic, home prices have increased by 6.6% on average, or $9,800, even more in some states. At the same time, interest rates have hit record lows for well-qualified buyers. The data from financial company NerdWallet says that in 2019 interest rates averaged 3.9%. As of November 9, 2020, interest rates are at 2.8% on a 30-year mortgage, which is 1.1% lower than in 2019. (Rates are as low as 2.5% for a 15-year mortgage.)
That 1.1% difference equates to 14% more buying power. For example, if you could only afford to finance a $270,000 house last year, making payments of $1,274 per month over 30 years, this year, you could afford to finance a $310,000 home for that same $1,274 payment. That’s an additional $40,000 in leverage compared to 2019. So even though home prices have risen, the extremely low interest rates still give you more leverage than last year.
So, can you get a better deal in 2020 than in 2019? The answer in most cases is yes. We don’t know how long these great low interest rates will last, so if you’re considering a move, don’t wait too long.
If you have more questions on this topic or any other real estate matter, text or call me. I’d love to be your real estate guide.