Is it affordable to buy a house right now? Let’s discuss this topic.

Housing inventory is at an all-time low, and Realtor.com just reported that there are about 39% fewer houses currently for sale in the Twin Cities metro area compared to this time last year. Simultaneously, buyer demand is very strong. Whenever there’s a shortage of supply for an item that’s in high demand, its price increases, and that’s what’s happening with properties these days. Home values are surging, which is excellent news if you’re a seller, but if you’re planning to buy a home, it’s a bit less affordable. 

That said, it’s still currently affordable to buy a house compared to historical real estate market trends. During the housing crash of 2009 to 2015, foreclosures and short sales dominated the market and sold at huge discounts never seen before that time, but that’s an entirely different situation to what’s happening right now. Buyers should remember that the price of the property isn’t as crucial as the monthly cost. 

“Whenever there’s a shortage of supply for an item that’s in high demand, its price increases.”

The main reason homes are still affordable today is the record-low mortgage rates. Freddie Mac announced that the average rate for a 30-year fixed-rate loan at this time last year was 3.68%, but right now it’s 2.72%. If you’re considering purchasing a house, look at the interest rates—they’re as low as they’ve ever been, and that will save you quite a bit of money. These days, the low interest rates balance out the rising home prices, but we need to keep an eye on them. 

If you have any questions about home affordability or real estate in general, call or email us. We would love to help you.