A Historical Housing Perspective: 1981 vs. 2012

It's likely you've heard a lot about the housing market recently. On the news there have been numerous stories about low interest rates and high home affordability. When reviewing the data however, it can be easy to miss an amazing fact: The average home today is more affordable than the average home 30 years ago. How is this possible when today’s home is more than twice as much? The simple answer: record-low interest rates.

In 1981, the average home was $82,000, the average 30-year fixed interest rate was 16.63%, and the average mortgage payment (principal and interest) was $1,147. Compare this with 2011’s numbers: average home at $242,300, average 30-year fixed interest rate at 4%, and average mortgage payment at $1,093. See the chart below.

  1981 2011
Average Home Price $82,500 $242,300
30-year Fixed Interest Rate 16.63% 4.00%
Mortgage Payment (P & I) $1,147 $1,093

 

When you adjust for inflation, $1,147 in 1981 is the same as $2,838 today. Put simply, you can buy 20 percent more house for a more than 60 percent discount. Couple high affordability with the fact that interest rates are at all-time lows, allowing people to enter the market with less money than ever before and produce cash flow at a higher rate, and you have an incredibly performing asset!

As a Certified Investor Agent Specialist (CIAS), I have spent a lot of time training myself in the best possible ways to help real estate investors build wealth. I do this by being an expert in my market and have developed a system that allows me to identify the best properties with the potential for the highest possible cash flow. Whether you are a first time investor or a seasoned veteran, I can be one of your most valuable resources.

Contact me today, and let's get you started on building your wealth! Frank

*The figures used in this example are only an example and should not be relied upon by you to determine your mortgage eligibility. To learn more about your qualifications, please contact a qualified mortgage consultant.