Home Affordability Improves

September 1, 2020
Affordability Improves
It currently requires a $1,071 monthly payment to purchase the average-priced home, which is down 6% from the same time last year.

Black Knight reported that last month’s record-breaking low interest rates contributed to creating the most affordable average-priced homes since 2016. Buying power for homebuyers increased 10% from last year, Black Knight noted, adding that shoppers can now afford roughly $32,000 more home than one year earlier while keeping their monthly payment the same. “As of mid-July, it required 19.8% of the median monthly income to make the payment on the average-priced home purchase, assuming a 20% downpayment and a 30-year loan,” said Black Knight Data & Analytics President Ben Graboske. “That was more than 5% below the average of 25% from 1995-2003. This means it currently requires a $1,071 monthly payment to purchase the average-priced home, which is down 6% from the same time last year, despite the average home increasing in value by more than $12,000 during that same time period.” Graboske added that while “record levels of job losses are certainly still weighing on the housing market and broader economy, for those shopping for a home now, buying power has clearly trended up.” Homebuyers are not the only ones profiting from this environment. Black Knight determined that the historically low 30-year-rates incentivized a record 18.1 million homeowners to refinance last month.

Source: MReport