Since the real estate market crash, housing affordability has been at an all-time high due to the low home prices and high number of distressed properties on the market.
However, due to sluggish economic outlook and lack of confidence in the real estate market, many homebuyers and investors alike resisted buying a home over the last few years.
Today, the real estate market is definitely making progress toward recovery and the unemployment rate is declining, but with this progress, homes are becoming more expensive and therefore harder for many Americans to afford.
According to the National Association of Home Builders / Wells Fargo Housing Opportunity Index, 69.3% of homes in the second quarter of this year were “affordable” for families with the median United States household income of $64,400. This is a decrease from 73.7% for the first quarter of 2013. Furthermore, this number has not been below 70% since 2008.
Mortgage Interest Deductions Are at Risk
The affordability issues could potentially be magnified if Congress decides to cut mortgage interest deductions, which go a long way in helping to encourage homeownership. In fact, Congress is looking at everything from first and second home-mortgage interest deductions as well as capital gain exclusions and property tax write-offs.
Mortgage interest write-offs consist of more than $70 billion of expenses per year, which is why they are a talking point in recent tax reform proposals. If these reductions are removed, then home affordability will more than likely decrease even more, especially as home prices continue to rise throughout the country.
If housing affordability continues to decline, even more people may look at renting as opposed to buying – even with rent rising throughout much of the country.
If you are looking for homes for rent in Birmingham, AL or you are in need of a property manager for your rental homes, contact gkhouses.com at 205.940.6363.