So, you know how everyone's been going on about how crazy expensive it is to buy a house lately? Well, good news - mortgage rates have dropped a bit since they hit a high in October. Don't forget, there's more to afford a home than just those rates.

Hey, so to really get a handle on home affordability, you gotta consider three key things: mortgage rates, home prices, and wages. Let's dig into the most recent data for each of these and see why affordability is getting better.

1. Mortgage Rates

Have you heard? Mortgage rates have dropped in the past few months, and it looks like they're expected to go down even more throughout the year. Jiayi Xu, an economist over at Realtor.com, breaks it down for us.

““While there could be some fluctuations in the path forward … the general expectation is that mortgage rates will continue to trend downward, as long as the economy continues to see progress on inflation.””

— Jiayi Xu, an economist at Realtor.com

Did you know that even a slight shift in mortgage rates can make a significant difference in how much home you can afford? This means that even a small change can potentially lower your monthly mortgage payment, making it easier for you to snag the home you've got your eye on.

2. Home Prices

The second big thing to consider is home prices. They went up at a pretty steady pace last year and it looks like they're going to keep rising moderately in 2024. It's like even though there might be a little more houses for sale this year, there still won't be enough for all the folks looking to buy. According to Lisa Sturtevant, Chief Economist at Bright MLS, this is the scoop.

““More inventory will be generally offset by more buyers in the market. As a result, it is expected that, overall, the median home price in the U.S. will grow modestly . . .””

— Lisa Sturtevant, Chief Economist at Bright MLS

Hey, that's awesome for you because it suggests that prices probably won't shoot up like they did during the pandemic. On the flip side, it also means that waiting might end up costing you more. So, if you're all set to buy and can find the perfect home, getting in before more buyers jump in and prices go up further could be your best move.

3. Wages

Another great thing making things more affordable currently is the increase in income. Check out this graph below which pulls its info from the Federal Reserve. It demonstrates just how wages have been on the rise over the years. So, things are looking up!

Check out the blue dotted trendline. It shows the usual rate at which wages increase. See how on the right side of the graph, the wages are above the trend line? That means they’re currently increasing at a faster rate than normal.

So basically, when you earn more money, it makes it easier to afford a house because you won't have to spend as much of your income on the mortgage. This means you can keep more of your paycheck for other expenses since you don't have to put a big chunk of it toward your monthly housing payment.

What This Means for You

So, when it comes to being able to afford a home, there are three key factors to consider: mortgage rates, home prices, and wages. The cool thing is that all these factors are actually heading in a good direction for people looking to buy homes.

Bottom Line

If you're considering buying a home, it's good to know that the key factors affecting affordability are getting better. Let's chat so I can keep you in the loop with the latest updates on this.