Is it real? The answer is, yes... it is a naturally occurring gas. It is also real in the sense that people are becoming "aware" and in that some homes are testing at levels above
Whats Feeding The Affordability Perception
What’s Feeding the Affordability Perception?
Affording a mortgage payment is possible for many prospective homeowners. Why then, by all accounts, is unaffordability plaguing the market?
Researchers at Freddie Mac offered several answers to that question in its latest Insight, the first one being perception. Homebuyers struggling to find reasonably-priced listings perceive the housing market in general as unaffordable — a reasonable conclusion, if their only options to date have been out-of-reach stock.
Secondly, the high likelihood for competition (i.e., bidding wars) is off-putting, both for first-time homebuyers and for sellers re-entering the market. The latter's hesitation is notably tamping down already tight inventory.
"Thanks to very low mortgage rates, monthly mortgage payments are affordable for the average household despite currently high house prices," says Sean Becketti, chief economist at Freddie Mac. "Nevertheless, hurdles to homeownership arise from the difficulty of finding a house. The supply of homes for sale is very tight, especially starter homes, and underwriting requirements are more rigorous than they were in the past."
Would-be homeowners are also not confident about their prospects because their incomes have stayed relatively flat compared to home prices. Incomes have grown by an average 2.4 percent annually since 2012; home prices, however, have grown an average 6 percent.
"Many potential first-time borrowers are stymied by variable employment and income histories and the challenge of accruing a down payment while simultaneously paying down their student loans," Becketti says. "In fact, a high level of household debt, particularly student debt, poses perhaps the largest obstacle to first-time homebuyers."
Homeownership — stripped down to just the mortgage payment — is affordable, the researchers concluded, but challenged by barriers that play a hefty role in the home-buying process. Perception, after all, is reality.
Source: Freddie Mac
Victoria Roberts, Associate Broker
Real Estate Brokers of Alaska
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