Updated: Dec 4, 2020
Home prices are appreciating, and they will continue to do so. So, does that mean they’re less affordable?
The media mistakenly looks at the significant move higher in the median home price, which is currently up 15% versus last year. But the median home price does not measure appreciation. Instead, it marks the middle price point of recent home sales.
With a lack of inventory for lower priced homes, there are simply more transactions occurring for higher priced homes, which pushes the median home price higher.
Actual home price appreciation across the US is currently in the range of 5.5% to 6% versus last year. And it is forecasted to increase by a similar margin next year.
Meanwhile, weekly earnings are up more than 5% versus a year ago. Additionally, only a portion of your income goes towards paying your mortgage. A 5% rise in income can offset a much greater percentage rise in housing expense.
This tells us that homes are actually more affordable, even though they have appreciated.
Don’t let the media fool you! Contact me so you can create wealth through homeownership.