Home prices rose by nearly six percent in January 2016, according to the S&P/Case-Shiller Home Price Index, which measures United States residential real estate prices. This was significantly higher than the rate of personal incomes, which has led to concerns about affordability for potential first-time home buyers.
Although an increase in residential real estate costs is typically seen as a boon for the housing sector – higher prices equal greater profits, after all – those costs can also create serious problems for individuals looking to purchase a home. Jeff Mezger, the CEO for KB Home, a major U.S. homebuilding company, recently observed that the price point for first-time home buyers has become a problem in recent years: the range of costs that a potential new home purchaser finds acceptable has gone up by more than $100K since 2013.
Senior US Economist: Home Affordability Remains a Problem
Michelle Meyer, the Senior US Economist for Bank of America Merrill Lynch and a housing expert, said that “new entrants into the housing market” may struggle with affordability because of the rising costs of buying a home these days.
Although Meyer still believes that a full housing recovery is likely, she acknowledged that housing hasn’t bounced back in step with the current economic recovery. That’s likely because housing problems were largely responsible for the recession in the first place, creating uncertainty and doubt in the housing market.
Additionally, Meyer noted that affordability may not be a problem for home buyers, even with home values rising at a significantly faster rate than income and wages, because interest rates remain low and monthly mortgage payments are reasonable.
To learn more, check out the Yahoo.com article, “The Housing Recovery This Time Is Different, Says Michelle Meyer.”
If you are thinking about buying a home or selling a home in New Jersey, Joel R. Spivack, Esq., is an experienced real estate attorney who can help you throughout the home buying process. Contact Mr. Spivack today to schedule a free consultation and go over your options.