Owning a home is more affordable today than it has been at any point in the past 15 years, according to a Wall Street Journal report. In a number of cities, the monthly cost of owning a home falls below renting due to low interest rates. And while rates continue to hover around 4%, rent levels are expected to rise by about 4% this year. Nationally, the real estate market shows positive signs, particularly in Miami and Phoenix, where visible inventory has fallen sharply.
Monthly mortgage payments (including taxes and insurance) on a median priced home are lower than rent levels in 12 of the 27 metro areas tracked, according to data compiled by Marcus & Millichap, a real-estate brokerage firm. Consider this scenario. In 1991, a $1700 mortgage payment allowed a borrower to secure a $200,000 mortgage. In 2012, the same borrower can capitalize on a $350,000 loan. That’s a whopping increase of 77%, says Dan Green, a loan officer with a mortgage firm based in Cincinnati.
But even with homeownership affordability high and interest rates low, some consumers are running into challenges. Either they find it tough to come up with a sufficient down payment or are turned away by strict lender qualifications. Over the next year, interest rates should continue to help buyers secure low-interest mortgages. If the down payment is the only hurdle, start living and saving for the dream house; it’s within financial reach. For the full story, see The Wall Street Journal.