Buying a Home Hasn’t Been this Affordable in 20 Years

According to a recent press release from the National Association of Home Builders, housing prices across the nation are at record levels of affordability. In the fourth quarter of 2011, over 75 percent of all houses sold could have been comfortably purchased by families earning the national median income of about $64,000. This news was corroborated by the U.S. Dept. of Housing and Urban Development, who said recently that not since 1971 have houses been so affordable. This buyer’s market in America is due the following factors:

-Decline in home prices
-Lowest interest rates on record
-Rock-bottom mortgage rates

Record Lows
The perfect storm of record low interest rates and decreasing prices may be a once in a lifetime opportunity to purchase a home on a dime. It would seem people are taking note of the advantageous tide. In late 2011, sales of new and existing homes increased 3 percent over the previous months. Housing prices themselves remain lower than they were the year before. The housing market’s recovery, however, is underscored by overly restrictive lending standards. Many who are looking to purchase a home for the first time simply don’t qualify for loans, keeping home ownership just out of reach. Some say these lending standards stifle and may slow recovery of the housing market.

You can afford a home, but can you buy it?
Just because you can afford a new or existing home doesn’t mean you can buy it. While mortgages are cheap, they can be difficult to obtain. Restrictions for loan providers and home builders can be obstacles for many in the housing market. Those lucky ones who do have the credit and collateral needed to obtain a loan will reap the benefits of interest rates that seem to be ever-decreasing.

Locations with the most affordable housing
Located near major underground gas reserves, Youngstown, Ohio, carries the coveted title of the area with the most affordable housing. This former steel town, now on the brink of economic renaissance, is full of bargains on homes. Residents of the town take home an average $54,900 annually, and those whose incomes fall within that median range can afford 91 percent of the houses in the Youngstown metro area.

Other locations with major housing markets and highest affordability percentages include Lakeland, Florida, Modesto, California, Toledo, Ohio, and Harrisburg, Pennsylvania. For smaller housing markets, percentages look even better. In Kokomo, Indiana, over 99 percent of homes were considered affordable with families earning a median income around $59,000.

The best news for potential homebuyers is that market prices aren’t likely to rise anytime soon. Since the recent $26 billion foreclosure settlement, many more foreclosures and repossessions are likely. This will drive down housing prices even further. Moreover, the Federal Reserve has promised to keep interest rates low for at least two years. Because mortgage rates also follow the government agency’s rates, those mortgage rates are also likely to keep at record lows.

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