The Phoenix Housing market is in a better state for buyers now than it was in 2007. The number of affordable homes is higher and more people can buy homes.
Conventional lending standards prohibit you from spending more than 28% of your gross income. The affordability formula is based on multiple variables. Three that are typically used are the initial price of a home, what the buyer earns, and what is available as mortgage rates at the time of purchasing.
Fifteen years ago, prices were higher and wages lower than now. Mortgage rates have increased in recent times but are still well below the 6% of fifteen years ago.
People today tend to spend less of the median income on a monthly mortgage payment than they did previously.
The median income is the amount of money an individual makes in a given year. When people spend less of their income on monthly mortgage payments, they can spend more elsewhere. This is good for the economy because consumers will have money to spend on other things instead.
House prices have risen across the country, with over 40% homes having more than 50% equity. Will these prices cause a bubble? Here’s what the experts are saying:
Experts believe that owners have not been tapping into home equity like the last time, as evidenced by national tappable equity has increased to a record $9.9 trillion. With the average home equity now standing at $300,000, what happened last time probably won’t happen today. If we had a shortage of jobs and too many inventory homes, this would be different.