Price of the Home

It’s Not Just About the Price of the Home

We naturally start by looking at the price of a home when most of us begin searching for a home. It’s important, however, to closely consider what else impacts the purchase. It’s not just the price of the house that matters, but the overall cost in the long run. Today, that’s largely impacted by low mortgage rates. Low rates are actually making homes more affordable now than at any time since 2016, and here’s why.

In fact, there are many buyers who could pay cash for a second home in Naples, yet they are taking advantage of low rates for their home purchase.

Today’s low rates are off-setting rising home prices because it’s less expensive to borrow money. In essence, purchasing a home while mortgage rates are this low may save you significantly over the life of your home loan.

Taking a look at the graph below with data sourced from the National Association of Realtors (NAR), the higher the bars rise, the more affordable homes are. The orange bars represent the period of time when homes were most affordable, but that’s also reflective of when the housing bubble burst. At that time, distressed properties, like foreclosures and short sales, dominated the market. That’s a drastically different environment than what we have in the housing market now.

The green bar represents today’s market. It shows that homes truly are more affordable than they have been in years, and much more so than they were in the normal market that led up to the housing crash. Low mortgage rates are a big differentiator driving this affordability.

What are the experts saying about affordability?

Experts agree that this unique moment in time is making homes incredibly affordable for buyers.

Lawrence Yun, Chief Economist, NAR:

“Although housing prices have consistently moved higher, when the favorable mortgage rates are factored in, an overall home purchase was more affordable in 2020’s second quarter compared to one year ago.”

Bill Banfield, EVP of Capital Markets, Quicken Loans:

“No matter what you’re looking for, this is a great time to buy since the current low interest rates can stretch your spending power.”

Mortgage News Daily:

“Those shopping for a home can afford 10 percent more home than they could have one year ago while keeping their monthly payment unchanged. This translates into nearly $32,000 more buying power.”

Forbes:

“Homeowners are the clear winners. Low mortgage rates mean the cost of owning is at historically low levels and who gains all the benefits of strong house price appreciation? Homeowners.”

So, when purchasing a home, it’s important to think about the overall cost, not just the price of the house. Homes on your wish list may be more affordable today than you think. Let’s connect to discuss how affordability plays a role in our local market, and your long-term homeownership goals.

Begin Your Naples Property Search

So, if you’re ready to begin your search for your own Naples Luxury home or condo, explore our website to find information about communities in the area. If golf is your game, we specialize in golf community real estate and we’ll help you navigate more than 150 different golf communities in our area.

Not sure where to start? Do you want a bundled golf community or an equity golf community? Do you want a home in a Naples gated golf community? Which amenities are important to you? Let us be your guide. Give us a call and we will provide a list of properties and communities that meet your needs.

Also, if you are considering new construction, remember the contractor’s real estate agent represents the builder’s best interest, not yours. There is no cost for you to have an agent represent you. In fact, we may be able to help you save money and negotiate for extras which the builder may not let you know about.

Do I need a Realtor if I’m Buying New Construction?

Lastly, we will handle all contract negotiations and paperless transactions for your property from offer to close!