Clearly, housing prices have fallen since the housing market collapsed, which surprised many who once truly believed real estate values could only go up.
But now the once record levels of affordability in housing are waning. In fact, housing affordability has hit a four-year low, close to those recession lows, according to the National Association of Realtors. That’s because interest rates have started to climb, although prices are generally still dipping.
While real estate trends in the District may tell a slightly different story -- as the housing market here from Southwest Waterfront to Georgetown is booming -- prices are still not quite to levels they were pre-recession. Likewise, home buying nationwide is still significantly more affordable than it was before the recession, specifically more affordable than at any time between 1989 and 2008.
Housing affordability is a measure of the average mortgage payment on a median-priced home as a share of income, and that figure rose to 16% in August after having steadily declined since about 2006, according to NAR. In fact, that figure has been only rising sharply since January, meaning homes are increasingly expensive for buyers’ budgets.
While home prices did dip overall this summer, the average home price rose substantially for several months earlier this year. In tandem, interest rates were also on a tear earlier this year but have since eased a bit.
For potential buyers, the lesson of this year still holds true: the time to buy is still now, as affordability is still low but only likely to get higher.
For More Information:
Rock Creek Realty, Georgetown: http://www.rcrdc.com/georgetown.php
National Association of Realtors: http://www.realtor.org/
Wall Street Journal on Housing Affordability: http://blogs.wsj.com/economics/2013/10/12/number-of-the-week-housing-affordability-hits-four-year-low/