I gave a first time home buyer seminar in Gwinnett County last week, and one of the stats that got the most attention was the fact that home affordability is at all-time highs – making right now the optimal time to buy a home anywhere around metro Atlanta, but primarily optimal for first time home buyers. Click the link for the first time home buyer affordability index from the National Association of Realtors.
How do we measure housing affordability? Simple. Three benchmarks that measure against one another:
- The median home price for the area.
- The median income for the area. (not the average income. Median income is 50% are above that, and 50% are below)
- Mortgage interest rates to purchase that home and finance it.
And, we are at all-time highs in housing affordability. What’s more, the Federal Government will give you $8000 for buying your first home, so long as you close on the home by November 30, 2009. Does that make the home more affordable? Well, yes.
Oh, and the chart above is based on the first time home buyer putting 10% down payment. If Atlanta buyers take out an FHA mortgage, it only requires a 3.5% down payment, and the monthly mortgage insurance is usually more affordable. That makes FHA loans my preference usually for first time home buyers.
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