Buying Power is up 10% - from a year ago.
Black Knight reports that despite home prices rising 97 months in row, affordability is the highest since 2016. For the same monthly payment, buyers can now afford almost $32,000 more home than they could a year ago.

The report notes that thanks to low mortgage rates, buying power is up 10% from a year ago. In that time, the average home price increased more than $12,000, yet the average
monthly payment went down 6%!

CoreLogic's CEO says, "we expect these price increases to moderate over the next 12 months" (nice for buyers), and that "given the economic outlook, housing remains a bright spot for the foreseeable future."

While the fallout from COVID-19 continues to weigh on the broader economy, record-low mortgage rates and improved affordability appear to be providing a backstop for the mortgage and housing markets.

As Black Knight Data & Analytics President Ben Graboske explained, "Despite eight consecutive years of rising home prices, July's record-low mortgage rates, which fell below 3% for the first time on July 16, have made purchasing the average-priced home for a median wage earner the most affordable since late 2016. Falling rates and improved affordability have helped to spur home-buying demand, and therefore purchase origination volume, which has provided a much-needed backstop for home prices in the wake of the COVID-19 pandemic.

A main takeaway from this month's report is that while record levels of job losses are certainly still weighing on the housing market and broader economy, for those shopping for a home now, buying power has clearly trended up.

How much mortgage payment can I afford?

To calculate 'how much house can I afford,' a good rule of thumb is using the 28%/36% rule, which states that you shouldn't spend more than 28% of your gross monthly income on home-related costs and 36% on total debts, including your mortgage, credit cards and other loans like auto and student loans.

The 28%/36% rule is a broadly accepted starting point for determining home affordability, but you'll still want to take your entire financial situation into account when considering how much house you can afford.

It is best to talk to a lender if you are thinking about buying a home.  Email me if you would like to receive a list of lenders that I know and trust.

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