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Last updated on February 3rd, 2021 at 10:16 am
The National Association of Realtors has said housing in the United States is very affordable right now.
Covid-19 has put restrictions on viewing and showing homes, but it has not affected the selling prices nor the availability, according to the association.
However, Jonathan Woloshin, head of U.S. real estate for UBS Global Wealth Management, said in a statement, “We are concerned that the methodology behind the association’s conclusion is overstating affordability and is masking the true cost of homeownership,” because according to him all of the factors are not being considered.
Earlier the monthly cost of homeownership was below that of renting an apartment in many markets but now the rising home prices, combined with flattening and declining apartment rents, are beginning to reverse the flow.
UBS said The National Association of Realtors bases its calculations on home buyers putting down a 20% down payment, but many home buyers only put down 10%, the buyer is then required to purchase mortgage insurance.
So the home buyers that they need to consider all costs associated with homeownership when calculating whether they can afford a home, including real estate taxes, homeowner’s insurance, and regular maintenance, which makes the homeownership less affordable.
Though the record low mortgage rates have helped raise demand in spite of continued rising prices, many first-time buyers could face issues due to the elevated student’s debt.
USB has noted the rapidly rising lumber prices will represent a potential headwind to the recent strength in housing demand.
Reference Source: Financial Advisor
