The Affordability Factor is better than ever in real estate

It is important to realize that today may be the best time to buy a home. This is based upon the affordability factor. The combination of low interest rates & low prices make this an incredible time to buy.

According to Lawrence Yun, Chief Economist for the National Association of Realtors, Housing affordability could possibly reach an all-time high of near 200 in the second half of this year. Meaning, that a household making the median income will have twice the income necessary to qualify for a median priced home. Historically over the past 40 yrs the average affordability index was at 118.

The reason for the index being this high is due to the interest rates being so low. At 4.4% on a 30 year loan. Also, the modest wage rate which increased 3% in 2009 and 1.2% ytd, despite the high unemployment. Keep in mind that these are national numbers.

For example, lets say that you bought a home for $250,000 and you put 20% down or $50,000 and was approved for a 30-yr fixed interest rate of 4.5%. Your payment would be $1,013.37. The same home a few years ago with a 6.5% interest rate would have been $1,264.14. You'd save enough money to pay your property taxes every month (total would be 1273.79 based upon 1.25% the purchase price of $250,000).

You might say that there are not any homes for $250,000 in the San Jose area. Remember, I have lived here all my life and I know the San Jose area like no one else. Let me just say that a few days ago I helped a buyer get an offer accepted on a regular sale home (not a short sale) for approx $250,000 and it's a home not a condo/townhome. Call me if you need some help finding a deal in the San Jose area. I work as a listing agent with banks, distressed sellers, and I know that your deal is just waiting for you.