According to the National Association of Realtors Affordability Index, qualified home buyers have more purchasing power today than at any time since 1970.
Here are several reasons that buyers who are on the fence should take notice before the train leaves the station:
1. The current 40 year buying advantage is a function of low interest rates and an oversupply of under-valued houses. However, during the last several weeks interest rates have begun to trend upward. So far, low prices have counter balanced higher interest rates, and it’s still homebuyer heaven out there.
2. There are serious potential tax savings for qualified buyers who make a purchasing decision soon. Make sure that your buyers are aware!
3. Mortgage rates and housing affordability factors are cyclical. By 1979, mortgage rates ballooned to 11-13%. Housing prices and mortgage rates were high, and purchasing power withered.
Members of Generations X and Y missed this major interest rate explosion. By the time Echo Boomers were a year old, mortgage rates were 17%. By the time they were 5 years old, rates averaged 9% and during their adult years, interest rates were between 4-7%. Therefore, during their adult years, Gen Y buyers have never experienced interest rates above 7%. It may be hard for them to comprehend how much purchasing power is lost when interest rates move north of 8-10%.
Real Estate professionals – It’s up to you to educate buyers on the reasons to make a buying decision now and not later. All Aboard!