Housing Affordability: Are House Less affordable now?
Your home purchase may be a better deal than what your parents and grandparents had 20 or even 40 years ago. Curious about how such a bold statement could be true? That’s right, don’t let the recent news headlines discourage you from purchasing a new home. A quick online search will result in dozens of articles discussing housing affordability declining. While it may be true that it’s less affordable to purchase a home today than it was three years ago. But, is it more expensive in today’s inflation-adjusted dollars? As the chart shows, when adjusted for inflation, there were only two times in the last 45 years that it was less expensive to own a home than it is today.
Yes, due to inflation, prices rise over time for consumables like juice, bread, and milk. The same is true for homes. They’ve appreciated in price dramatically over the years.
So, are homes less affordable than in previous decades? When we look at the cost of a home over the past 50 years and take into consideration inflation, P&I, mortgage rates, and the mortgage amount we get a much different picture of where we’re at today relative to the past five decades.
Don't Let The Headlines Discourage Your Home Purchase
Despite the recent headlines discouraging home purchases, the chart above shows, remarkably there were only two times in the last 45 years that it was less expensive to own a home than it is today. Yes, at every other point including 1975, it was more expensive to buy a home than it is today.
Don’t let the headlines discourage you. Contact an agent at Nebraska Realty to discuss your individual situation.