Today I am going to talk about what the recent decrease in affordability means for you and your real estate goals.
In the first quarter of 2018, affordability dropped about 5%. This is mainly due to rising mortgage interest rates. We have seen many people take on a higher percentage of debt relative to their income in order to buy a home, and some buyers are being pushed out of the marketplace altogether.
Another drop in affordability, this time by 15% to 20%, is forecasted for later in the year. Again this change will be due to a shortage of inventory, higher price points, and rising interest rates.
What does this mean for you?
As a seller, there is a lot of demand and a shortage of supply. Phoenix, in particular, has a severe shortage of inventory. So if you are thinking about selling, we will be able to get your home sold relatively quickly—especially at the lower entry-level price points.
Meanwhile, with the affordability forecasted to drop even further, buyers are beginning to get off the fence and make their move.
However, there is no need to panic. Our current affordability is still 15% to 20% higher now than what we saw between 1987 and 2004.
Yet if you are thinking about buying or selling, don’t delay. The cost of waiting could be massive.
If you have any questions about this or are interested in buying or selling, please feel free to contact me. I would be happy to speak with you.