Housing Affordability: Now Is the Time to Buy

Housing affordability is at an all-time high, If you can qualify for a mortgage, it is a good time to buy and be a homeowner. According to Freddie Mac’s market update for the beginning of March, fixed-rate mortgages remained at  some of the lowest rates in 60 years, helping to motivate homebuyer affordability as we approach a new buying season.   

The National Association of Realtor's (NAR) Housing Affordability Index reported that "the index rose to 206.1 in January, and an index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced single family home, assuming a 20 percent down payment and 25 percent of gross income for mortgage principal and interest payments." 

The 15-year fixed mortgage, a popular choice among refinance borrowers, averaged a new all-time record low of 3.13 percent this week. The 30-year fixed rate mortgage averaged 3.88 percent, just a base point away from the all-time low of 3.87 percent set last month. With a decline in the unemployment rate, an increase in production, and a decrease in mortgage interest rates makes 2012 a great time to buy and invest in real estate.

Here’s an overview of mortgage interest rates (data provided by Freddie Mac):

• 30-year fixed-rate mortgage averaged 3.88 percent, with an average 0.8 point for the week ending March 8, 2012, down from last week when it averaged 3.90 percent. Last year at this time, the 30-year averaged 4.88 percent.
• 15-year fixed rate averaged 3.13 percent, with an average 0.8 point, down from last week when it averaged 3.17 percent. A year ago at this time, the 15-year, averaged 4.15 percent.
• 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.81 percent this week, with an average 0.7 point, down from last week when it averaged 2.83 percent. A year ago, the 5-year ARM averaged 3.73 percent.
• 1-year Treasury-indexed ARM averaged 2.73 percent this week, with an average 0.6 point, up from last week when it averaged 2.72 percent. At this time last year, the 1-year ARM averaged 3.21 percent.

“This is the first time the housing affordability index has broken the two hundred mark, meaning the typical family has roughly double the income needed to purchase a median-priced home,” said Moe Veissi, NAR president.

The affordability of available homes in Los Angeles county is something that I am trying to help my clients realize, since these deals won’t last forever. So if you can qualify for a mortgage, now is a very good time to become a homeowner.  

Veissi states, “Housing inventory levels have declined to a point where conditions are becoming much more balanced in much of the country. If access to credit improves, we could see a much more meaningful increase in home sales and broader stabilization in home prices with modest gains in areas with stronger job growth.”