I always think it fun to play the “did you know game” every once in a while. It’s even more fun to do it with the real estate business of which I am so passionate about. I was at Keller Williams Annual Conference in February, listening to Gary Keller talk about the state of the real estate business. Here’s a few “did you knows” to kick around when you are thinking about making a move.
1) Since 2006, mortgage rates are down by 50%. The affordability of a home always boils down to the monthly payment. Nothing affects monthly payment quite like interest rates. You may have missed home prices at their lowest point, but you did not miss interest rates at their lowest. In 1989, the average home price in America was $94,000 and the interest rate was 10% for a total monthly payment of $825 a month. Today, the average home price in the US is $176,000 and the interest rate is 3.4% for a total of $781 a month. Home prices have almost doubled in the last 24 years but your monthly payment is less than what it was in 1989. That’s how much interest rates affects affordability.
2) The top five reasons people buy a home have not changed much over the last 24 years as well. Here are the reasons why people buy and they are in order of priority.
- The pure desire to be a homeowner
- Desire for a bigger home
- Change in family status
What can we glean from this data? It’s amazing to me to that low home prices or low interest rates or an income tax deduction doesn’t seem to motivate the average person to buy a home. At the end of the day, the number one and most motivating factor is the pride of ownership. Having a place you can raise kids, grow old, build memories and relationships is still the number one motivating factor for Americans to buy a home. I think it’s equally interesting that over the last five years, people have been constantly talking about downsizing their lifestyles, including their homes. Yet, the number two reason to a buy a home was to get one that is bigger. So much for smaller is better!
Whatever your reason is, the home buying season is upon us. Happy House Hunting!
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