Did you know that homes today are a whopping 48% more affordable than homes were in 2006?
Is it true?
It’s true! A report by RealtyTrac finds that homes today are far more affordable in 2015 than they were during the 2006 housing bubble.
Why?
This is mainly due to lower interest rates now than we have seen in recent years! In the first quarter of 2015, monthly payments on an average-priced home were around 36.5 percent of the average wage. This is lower than first quarter of 2014 when monthly payments—including property taxes, home insurance, private mortgage insurance and a 3 percent downpayment—were at 37.4 percent of the average wage.
This is the most affordable we have seen homes since the first quarter of 2013 when housing costs were at 33.5 percent.
Experts Say…
"Although home prices continue to outpace wage growth in the majority of local markets, this analysis somewhat surprisingly shows that affordability is actually improving in most markets thanks to falling interest rates and slowing home price growth, which is allowing wage growth to catch up in some markets," says Daren Blomquist, vice president at RealtyTrac.
What Has Changed Specifically?
Well, in the second quarter of 2006, the home prices were about 12 percent higher than they are currently. The national wage average was grossly lower—34 percent lower than today to be exact. The cost of a 30-year mortgage also went down, with interest rates falling 44 percent in the last 9 years. Together, this has made the housing market 48 percent more affordable than it was in 2006.
Florida is also one of the most affordable states to live in, with the most affordable county in the nation being Hamilton County, Florida. In Hamilton County, only 5.6 percent of the average wage was needed to make the monthly payment on an average-priced home—compared to 36.5 percent nationwide.
Other affordable counties with a low percentage of average wages needed to maintain the home are St. Louis County, Mo. (8.3 percent); St. Louis City, Mo. (9.4 percent), Lake County, Ind. (9.5 percent), and Fairfield County, S.C. (10.3 percent).
