Can I afford to buy a home? Buyers are freaking out and feeling like they can’t afford a home. Well, if you have been following the Columbia, SC real estate market recently, I’m sure you’re well aware of the shifting market. For months, even years, the market has tilted more favorably for sellers. There have been high home prices, a lack of inventory, and multiple offer scenarios almost across the board. What key factors are affecting home affordability in today’s market? Hi, I am Beth Tamminga with eXp Realty. Today, three factors are used to gauge home affordability: Home price, current mortgage rates, and wages. So, let’s look at all three to see what challenges buyers might face in today’s market. The fluctuation in mortgage rates is what buyers seem to be most focused on today in their search. So, how will rising interest rates determine what a buyer can afford? This year rates are almost four percentage points higher than at the beginning of quarter one. According to Len Kiefer, Deputy Chief Economist at Freddie Mac, and I quote, “The 30-year fixed mortgage rate has increased 3.83 percentage points since the end of last year. That’s the biggest year-to-date increase in rates in over 50 years.” Because these rate hikes impact how much it costs to finance a home, that may be pricing buyers out of the market. Also, looking at current home prices when looking at buyer affordability is essential. Although home prices have come down in recent months, they are still much higher than they were “pre-pandemic.” So, combining the higher-than-usual home prices and mortgage rate spikes can make affordability a challenge for some buyers. And what about wages? The good news: wages have grown over time, so more buyers are taking home more money in their pockets. This will help balance out the affordability with the higher mortgage rates and home prices and allow serious buyers to continue buying homes. Buying a home involves many variables, so it is always best to have a trusted real estate agent with enough experience and knowledge to navigate you from start to finish. Feel free to reach out to my team and I so we can help you make the most informed decisions on affordability with your home search. I'll lead you the way home!