There’s a lot of talk in the news about homes becoming more unaffordable, but the truth is, homes today are far more affordable for potential buyers than they were for the previous generation.
According to a recent affordability report from Zillow, the share of income needed to cover monthly mortgage payments on the median home in the US is 17.1%—a solid 4% less than the previous generation of homebuyers (people who purchased their homes between 1985 and 2000 who put 21.1% of their monthly income towards mortgage payments). That means if you bring home $75,000 per year, you’d spend an average of $1062.50 on your monthly mortgage payment in 2018. Compare that to the $1318.75 spent by the previous generation.
Prices may be rising, but competitive interest rates and a strong job market means people are still paying less each month for their homes than the historic average, which is great news for potential buyers. If you’ve been thinking about purchasing a home, you’re going to want to make a move before those costs start increasing.