According to a report by JP Morgan thoroughly explained by KeepingCurrentMatters.com, now is the time to buy a home!
Price-to -Income Ratio
A measure of housing values is the ratio of income to home prices. “Since 1966, the median price of an existing single family home in the U.S. has varied between 150% and 251% of personal income per household. However, roughly three quarters of the time it has been in a relatively narrow band between 185% and 230%.” Currently the ratio is only 153%.
Curent Mortgage Interest Rates
With current 30 year mortgage rates, housing prices are at historic lows as compared to income due to such low interest rates. At a 4% interest rate:
“Assuming the use of a fixed rate mortgage with 20% down, this would make the median mortgage payment on a single family existing home just 6.9% of per household personal income, compared with an average of 14.4% since 1966.”
Monthly Rent vs . Monthly Mortgage Payment
A common question among renters, “Is it more expensive to own or rent a home?”
“…we estimate that the implied median mortgage payment has fallen to just 78% of the median asking rent…”
Now Is The Time To Buy!
“The numbers on housing have an important message for American families today, and particularly younger families setting out on life’s great adventure: Five years ago, at the peak of the home-buying euphoria, it was emphatically a time to rent. Today, when home ownership is depreciated more than ever before, the numbers tell us it is a time to buy.”