Forget the Price of the Home. The Cost is What Matters.

Forget the Price of the Home. The Cost is What Matters.

Forget the Price of the Home. The Cost is What Matters. | MyKCM

Home buying activity (demand) is up, and the number of available listings (supply) is down. When demand outpaces supply, prices appreciate. That’s why firms are beginning to increase their projections for home price appreciation going forward. As an example, CoreLogic increased their 12-month projection for home values from 4.5% to 5.6% over the last few months.

The reacceleration of home values will cause some to again voice concerns about affordability. Just last week, however, First American came out with a data analysis that explains how price is not the only market factor that impacts affordability. They studied prices, mortgage rates, and wages from January through August of this year. Here are their findings:

Home Prices

“In January 2019, a family with the median household income in the U.S. could afford to buy a $373,900 house. By August, that home had appreciated to $395,000, an increase of $21,100.”

Mortgage Interest Rates

“The 0.85 percentage point drop in mortgage rates from January 2019 through August 2019 increased affordability by 9.7%. That translates to a $40,200 improvement in house-buying power in just eight months.”

Wage Growth

“As rates have fallen in 2019, the economy has continued to perform well also, resulting in a tight labor market and wage growth. Wage growth pushes household incomes upward, which were 1.5% higher in August compared with January. The growth in household income increased consumer house-buying power by 1.5%, pushing house-buying power up an additional $5,600.”

When all three market factors are combined, purchasing power increased by $24,500, thus making home buying more affordable, not less affordable. Here is a table that simply shows the data:Forget the Price of the Home. The Cost is What Matters. | MyKCM

Bottom Line

In the article, Mark Fleming, Chief Economist at First American, explained it best:

“Focusing on nominal house price changes alone as an indication of changing affordability, or even the relationship between nominal house price growth and income growth, overlooks what matters more to potential buyers – surging house-buying power driven by the dynamic duo of mortgage rates and income growth. And, we all know from experience, you buy what you can afford to pay per month.”

2018 4 Achievable Goals for Real Estate Agents


  1. Generate 50 qualified leads each month using online resources, opportunities, social media platforms and your company website. Here at NextHome Findly Estates we provide you the tools and programs to generate hot leads at no extra cost, direct access to social media websites and person business and property website.
  2. Maximize your online presence: Increase visits to your personal website, update your profile on websites like Zillow, your current listing descriptions and photos, past sales and reviews on a weekly basis, and share two to three social media posts per week. Here at NextHome Findly Estates we believe staying up-to-date is important for todays market which is why we have every tool you need to build maintain and stream line your business using our tools with maximum exposure of your name and listings with our National Listing Distribution and Reach150.
  3. Continued education and Training. Here at NextHome Findly Estates we provide training and the education you need to succeed
  4. Attend at least one local networking event every month.

Join us and we will help you achieve your 2018 goals!

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