Is Housing Affordability Worsening?

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According to polls taken by the National Association of Home Builders, Buyers’ perceptions of housing affordability have deteriorated for three straight quarters. This indicates that double-digit home price hikes over the past year have offset the positive impact of low-interest rates.

In the third quarter of 2021, 73% of buyers estimated they could afford less than half the homes available for sale in their markets. The number is up from 71% the prior quarter, and from 63% in the final quarter of 2020.

While the perception is that affordability is low, the reality is indifferent. A key is and has always been finding a good Real Estate agent and lender.

Buyers outnumber sellers

The number of buyers in the marketplace far outnumber the number of homes on the market. This has led to higher prices. At the same time interest rates for home loans are very low. “The key to finding a fair deal is to position the buyer for success”, says Sharon St.Clair of eXp Realty. “I’m meeting buyers that have placed 6 offers or more on listed homes only to come up short. That’s a failed system that leads to a buyer overpaying for a property so they don’t come up short again.” “You also have buyers waiving home inspections, that is a mistake”

New Construction– Find an Agent that Understands the Product

“You also need a good agent that understands New Construction.” Walking into a builders model and purchasing through the builders representative leaves the buyer with no representation.” “There are agents that understand new construction and how to represent the buyer in this type of transaction.”

There are variables from lot pricing, choosing the right lot for the home style, what items are considered inclusions and upgrades, the absolute value or importance of the upgrades, and more. “Having the experience of representing builders in several developments, I can tell you walking into a development and signing papers with a builders representative is a big mistake. I liken it to someone selling their home on their own or with a discount broker and thinking they came ahead. Of course, they’re going to tell themselves they made the right choice.” says Don Minehart of eXp Realty.

The bottom line is, if you are working with the right Real Estate team/agent your opinion of affordability may change whether its an existing home or new construction.