Home Prices Suggest Now is the Time to Purchase Real Estate
Provided they can qualify for a mortgage, the latest round of home price data suggests that home affordability is at a high for recent years, according to data taken from Fiserv’s Case Shiller Indexes.
"Housing affordability has improved dramatically because of declines in both prices and mortgage interest rates," said David Stiff, chief economist at Fiserv. "The monthly mortgage payment for a median-priced single-family home is now $700, compared to $1,140 in 2006 - a decline of nearly 40%.
“Nationally, purchase mortgage payments now account for only 13 percent of monthly median family income, the lowest percentage on record (since 1971), and compared to 23 percent in the first quarter of 2006."
The company reported that single-family home prices dropped 5.9% in 2011's second quarter compared to a year ago and that prices fell in 340 out of 384 metro areas, with 302 metros hitting new home price lows.
The company said it projects that home prices across the U.S. will decline another 3.6% by the second quarter of 2012, before rising by 2.4 percent by the second quarter of 2013%.
"Although homes have become much less expensive, housing demand remains depressed with existing home sales back to 1998 levels, averaging 4.3 million units per year since June,” Stiff added, explaining the continued low prices. “Many households cannot finance first-time or trade-up home purchases to take advantage of lower home prices because of much stricter mortgage lending standards. But even households with access to mortgage credit are hesitant to buy homes while job growth is weak and consumer confidence is low."