Many of my friends and clients have asked me recently whether or not now is a good time to buy a home. The most common headline we are seeing is that competition and housing prices are at an all time high. But digging deeper than the headlines, it's important to note that housing affordability is actually below historic norms!
What does this mean? Most lenders agree that you should spend no more than 28% of your gross monthly income on a mortgage payment (Freddie Mac). Housing costs are not considered burdensome if they account for no more than 30% of your income. As you can see in the chart above, today's average is around 15.1%.
As interest rates increase in the coming months and years, affordability will actually get worse than it is now. If you're currently renting or thinking about upgrading your home, now is the time to start building equity!