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A SILVER LINING: HOUSING AFFORDABILITY

 lower housing  

The silver lining in the current housing market is affordability.  There has never been a more affordable time for buyers.  The National Association of Realtors recently posted a record high housing affordability index of 173.5 for the country.  This is the highest rating since the Association began recording affordability in 1970.  The index is a relative index where a value of 100 means that a family with median income has exactly enough income to qualify for a mortgage on a median priced existing single-family house.  The higher the index the better housing affordability is for potential buyers.

Right now interest rates are at record lows and housing prices have dropped significantly.  This could change in the future however.  The key is inflation.

With the government printing money to cover war costs and the nation’s debt load, we could be headed for rampant inflation.  How will this affect the real estate market?  It will become more difficult for consumers to find affordable housing.  Wages rarely keep up with inflation.  The price of durable goods such as housing can rise dramatically.  While this may deter some buyers, for many others there will be a rush to buy during times of improved appreciation.  Those who have bought a home today will watch the value of that home go up.  That value will not be tied to speculation, but will be a result of the intrinsic value of the current dollar, which is a more stable situation.

If you have inclination to buy, buy now.  Take advantage of the low interest rates and lower housing prices.  It will be a wise investment.

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