Here are three important factors affecting home affordability.

In the realm of real estate, the discourse surrounding home affordability has been a persistent topic of discussion. Today, I’ll shed light on the current landscape, providing insights into what it means for potential homebuyers in 2024.

Home affordability has indeed become tighter. Fortunately, in recent months, there has been some relief, particularly in mortgage interest rates, which have declined since their peak in October 2023.

When assessing home affordability, three key factors come into play: mortgage interest rates, home prices, and wages. Mortgage interest rates have seen a decline in recent months, with experts predicting a further decrease throughout 2024. According to Jiayi Xiu, an economist from Realtor.com, even small changes in mortgage rates can significantly impact monthly payments.

Home prices experienced a modest increase in 2023, with expectations of continued moderate growth in 2024. Despite an increase in inventory, the demand from buyers still outpaces the supply, contributing to the expected moderate rise in median home prices. Lisa Sturtevant, the chief economist at Bright MLS, emphasizes that increased inventory will likely be balanced by a higher number of buyers in the market.

“Mortgage interest rates have seen a decline in recent months, with experts predicting a further decrease throughout 2024. ”

Wages also play a crucial role in affordability. Federal Reserve data indicates that wages are currently above the typical trendline, suggesting a higher-than-normal rate of increase. Higher wages translate to greater affordability, as a smaller percentage of income is needed for monthly payments.

For those considering buying in 2024, it's advisable to act sooner rather than later. While home prices are expected to grow moderately, they are not anticipated to skyrocket, providing a favorable environment for potential buyers. If you are contemplating a purchase, call or email so we can assess your specific situation. Let's discuss whether buying now or waiting a bit aligns with your goals.