2021 has been an interesting year for real estate both across the country and in Tualatin. Locally we have seen housing inventory decline by 60 percent. Where typically we see 60 or so homes for sale in Tualatin, recently the number has been around 20. Home prices have risen close to 20 percent because of this tight supply. This has caused many people to give the housing market some pause. When thinking about buying or selling, it is important to understand the true dynamics of the market.
There are many headlines about how housing affordability is declining. The headlines are correct: it’s less affordable to purchase a home today than it was a year ago. However, it’s important to give this trend context. Is it less expensive to buy a house today than it was in 2005? What about 1995?
Obviously, the price of a home has appreciated dramatically over the last 25 years. However, when we look at housing, price is just one component that makes up the monthly cost of the home. Another key factor is the mortgage rate at the time of purchase. Mortgage rates are still at historic lows helping keep the total cost of ownership affordable. When adjusted for inflation and current mortgage rates, homes today are more affordable than they were in the 1980’s, 1990’s and the better part of the 2000’s. The only exceptions being last year and 2010.
If you want to buy a home, don’t let the headlines about affordability discourage you. Remember, headlines are meant to terrify, not clarify. While you can’t get the deal your friend got last year, you will get a better deal than you would have in 2015 or even two years ago.