We’ve already established that home prices are likely to rise for the foreseeable future. Too many factors are driving them up. So any corrections will likely be short-term.
But what does this mean for the average person who wants to buy a home? The answer depends on whether or not you already own a home.
First-time buyers are in for some challenges ahead. The median price of a home sold in the greater Austin area in January 2017 was $279,990, according to the Austin Board of Realtors®. I’ve even heard people talk of $250,000 starter homes with a straight face. Seriously? Who can afford a $250,000 starter home?
Lendingtree has some good advice to help you determine how much home you can afford, but let’s just look at one of the qualifications. Your total outlay for your mortgage (principal, interest, taxes, and insurance) should not exceed 28% of your income, according to Bankrate. So if you make the median income for Texas ($55,653), your total mortgage payment cannot exceed $1,298.57, and half of the people in the state can’t afford that payment. At today’s interest rates and Austin’s taxes, you might be able to qualify with only a $10,000 down payment plus closing costs.