Imagine paying $500 for a down payment and then $60/month as a mortgage payment. Now imagine earning $1.25/hour. It's 1958.
Imagine borrowing $2,000 for a down payment on a $42,000 condo and paying $248/month for your mortgage. Minimum wage is $3.35/hour. It's 1981.
These home-buying stories come from a Quora post by Joan Vredik Broadley. She described how her family struggled to make monthly mortgage payments after borrowing the down payments in these examples. She continued the family tradition as she helped her adult children with the down payment on their first homes. When people ask if housing will be more affordable in the future, she wonders if there has ever been a time, or ever will be a time, when housing is truly "affordable".
As of late, house prices have begun to drop as we move from a home seller's market into a buyer's market. Sellers realize that buyers aren't willing to pay exorbitant prices and, therefore, are lowering their sale price to get an offer on their house. Unfortunately, the decreased sales price is still inflated due to the lingering influence of home selling prices from 2020-21 (per Lawrence Yun, Chief Economics Officer, National Association of Realtors®). As sellers meet with their real estate agents, they're faced with a reality check when they learn the suggested sale price of their home.
As you seek a home to buy, talk to your real estate agent about the value of the home you're hoping to purchase. Ask how today's home prices compare to 2019, pre-pandemic home prices, not 2020-21 prices. Without a real estate agent, you could be spending more on a house than it's truly worth in today's housing market. If you need help finding a local real estate agent, please email us at info@reazo.com.
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