Housing is becoming more affordable ? if buyers have the cash.
January?s Housing Affordability Index released Tuesday by the Maryland Association of Realtors saw an increase of 0.4 percent, indicating housing is becoming more attainable for in-state buyers.
Overall, the Housing Affordability Index stands at 45.7 for January.
“I have sold a lot of homes in the last two months to first-time home buyers,” said Ilene Kessler, president of the Maryland Association of Realtors.
Using a 5 percent down payment in its formula, the MAR estimates that for an individual or a family on an annual income of around $80,000 would need totake out a loan of nearly $253,000 to afford a house valued at around $266,000. Competitive interest rates are helping to keep housing affordable. In January, the mortgage rate was right around 6.92 percent, well below the 7.32 percent it was hovering around in June, the MAR reported.
“Interest rates are not going to go down any further,” said Deborah Ford, an economics and finance professor at the University of Baltimore. “For people who are waiting for interest rates to go down and are afraid prices will go up, I wouldn?t wait any longer.”
The association also indicated the cost of a starter house fell about $14,000 during the last six months, down to about $286,000. This figure is more than the $266,000 house called “affordable” on an $80,000 income, but substantially less than a house in Baltimore City, Baltimore, Carroll, Anne Arundel, Harford or Howard counties. In the latest Metropolitan Regional Information Systems Inc. report for January, the average price a property sold for was more than $480,000.
M&T Bank told The Examiner that an average 30-year mortgage will run a buyer somewhere in the mid-to-low 6 percent interest range. Dave Skaff, an administrative vice president for M&T, admits that while that interest rate isn?t historically low, it is lower than the current rate projected by MAR. As far as a down payment, he also indicated buyers are putting less cash down.
“Every person?s situation is different,” Skaff said. “You never want to tell them to put down no money, but there are people who can do it.”
