Affordability Drives Potential Buyers to Market

Low prices and high affordability both urge consumers back to the housing market, according to Realtor.com’s national homeownership survey.

Nearly two-thirds – 65.2% — of potential homebuyers surveyed named increased affordability as a motivator them to purchase a home. Foreclosure bargains in their communities are the motivating factor for 19.6% of potential buyers surveyed.

That belief is substantiated by the National Association of Realtors’ (NAR) Housing Affordability Index, which has increased 29% overall and 19% for first-time homebuyers. Affordability is at its highest point in 28 years, according to the NAR index.

“Value is clearly motivating potential home buyers, and today’s new level of affordability is still an under-appreciated reality that needs to be explored,” said Realtor.com president Errol Samuelson in a release. “The variety and quality of homes currently within reach of the average American family is much greater than most people realize. Making credit available to responsible borrowers and building consumer confidence in the economy are now key factors in restoring vitality to the nation’s housing market.”

The survey also showed that low prices aren’t making sellers wary of the market. Only 10% of potential sellers said they were holding off putting their home on the market because of lower prices.

In addition, 15.5% of potential buyers said they were motivated to buy soon because they believe prices are as low as they’ll go, despite a report issued earlier this week by PMI Mortgage Insurance Co. that estimated home prices may be lower two years from now in 85% of the country’s metropolitan statistical areas.

A concern over interest rates increasing was the factor an additional 15.5% of Realtors.com’s respondents said is motivating them to buy, while the federal government’s $8,000 tax credit for homebuyers is the motivation 14.6% of respondents said they need to get into the housing market.

Write to Austin Kilgore.