22 Nov Cincinnati Area Boasts Amazing Home Affordability!
November 18, 2010
Article Written/Published by: Cincinnati Area Board of Realtors
Waiting for Bottom
If you’re one of the would-be homebuyers telling your REALTOR® you want to buy…but are waiting for home prices to hit bottom, you might want to rethink your strategy. In theory, it seems like a good idea to “go for the low,” but history has shown it’s next to impossible to do. Even experienced stock market investors have difficulty recognizing when a market has bottomed out.
You may recall the U.S stock market’s dramatic 54% decline >> the Dow Jones Industrial average had fallen from an Oct. 2007 high of 14,164 to a March 2009 low of 6,547. At the low, buyers could have bought stocks at bargain prices, but many waited for prices “to go lower.” Instead, just 3 months after the big dip, the Dow Industrials gained 34%. Today, it’s trading even higher at 11,181 … up 70% from the market low. Buyers who waited regret their decision to not buy when they had the opportunity.
More Buying Power
Real estate experts say that trying to buy a home at the lowest possible price is understandable, but affordability is the one of the best metrics for helping you decide when to buy. In simple terms, if the cost of owning your own home is even close to renting, and you can afford the costs, then buying a home is the way to go.
|Monthly Mortgage Payment ( based on a 20% down payment)||$745||$562|
|Median Annual Income||$61,652||$69,500|
|Overall Home Affordability Index* (higher is better)||172||257|
*An index score of “100” means a qualified home buyer with a median income has exactly enough income for an 80% mortgage on a median-priced home.
[The illustration above is from the July-September 2010 time period.]
The above comparison shows Home Affordability for Greater Cincinnati has never been better. The Cincinnati area was favorable in all three measured components and, correspondingly, the overall Home Affordability Index. Comparing Cincinnati’s affordability index of 257 vs.172 for the nation means that local buyers have 49% more buying power than the average national buyer!
Affordability Helps Sellers, Too
Affordability benefits sellers, too. If you’re faced with selling your current home at a reduced price, take heart in knowing you, too, can benefit from the favorable affordability index. Sellers often discover they are able to more than offset their loss by the money they save on the next home they purchase.