Home Affordability and Real Estate Prices in 2021

Just like any commodity real estate prices are also driven by the law of supply and demand. In times of economic crisis, it is usually the commercial spaces that suffer the most due to a decrease in demand. However, demand in residential real estate tends to be more stable even amidst a crisis like the Covid 19 pandemic. Although this is good for the real estate industry, the upward movement in demand and residential real estate price index makes home affordability an issue for those who have yet to buy a house. In the meantime, this USAA VA mortgage calculator might help buyers understand how much spending power they actually have in this market.

Supply and Demand for Affordable Homes

Home affordability is an issue that affects both low-income and middle-income families. Those who have very little in life also have very little hope in owning a house without help from government housing programs or organizations like Habitat for Humanity. As for middle-income earners, affordability issues usually arise in finding a property that fits their needs and lifestyle. There are several factors that dictate the pricing or affordability of real estate. The most basic one is the supply and demand wherein prices go up when demand is high and supply is low and prices go down when demand is low and supply is high. At times, all these terms could be quite confusing for someone who’s not so well-versed in real estate investment. However, thanks to companies like Kime Realty (to know more, click here), investing in a property isn’t a far-fetched dream anymore. Real estate agents nowadays tend to make use of various methods to get their clients the best possible deal out of multiple listings. Be it an FSBO (For Sale By Owner) leads or looking for homeowners who didn’t sell, they could use all possible methods to make sure their clients are satisfied.

That said, it is evident that a growing population means a growing need for living spaces. Thus, it is not surprising that demand for residential real estate also continues to grow especially in urban areas that are densely populated. Given the preference of people to live near the workplace and school, real estate prices in Business Districts or the metro can be quite expensive. Nevertheless, the contrary situation too exists. Even the lesser populated areas, like some parts of California and others, are seeing a rise in demand for real estate, as people start to look for homes away from the hustle-bustle of the cities and in quieter, more peaceful places. As we can glean from informative websites such as https://camdenmckayre.com, the amenities and access to necessary services in such areas are not scarce, either. Hence, while there may be an upward trend for real estate in the major cities, the same could also be said for the suburbs and coastal towns as more people step away from the crowd and settle in smaller towns.

According to a study on affordable housing from Lamundi in 2018, some real estate developers have expressed their commitment to addressing the increasing demand for affordable homes in the country. When Covid 19 hit the country, economic uncertainties caused a decrease in demand for residential real estate but quickly recovered with an upward trend by the first half of 2020.

How much does it cost to own a home in the Philippines?

Residential real estate prices depend on several factors, two of which are housing segment and location. The most affordable housing in the country is classified into 3 segments according to the Housing and Urban Development Coordinating Council (HUDCC). Socialized Housing are those that cost P450,000 and below, Economic Housing are priced between P450,00 to P1,700,000, and Low-Cost Housing prices range from P1,700,000 to P3,000,000. Townhouses and Condominiums can range from P4,000,000 to P7,000,000 while residential properties in prime locations like Makati, Taguig, and Ortigas are priced at 120,00 to 1,000,000 per square meter.

Can I afford to buy a new house?

The real gauge in determining if you can afford to buy a new house at this point is your current financial status. Some of the questions you may want to ask are: How much are your earning? Is it from a stable source? Do you have other sources of income? What are your expenses? How much is your savings? Compare your bottom line figures with the amount of investment you need for your real estate buy and see if it is doable. Or you could use a mortgage calculator for a simpler and easier way to check your finances.

Buying a new house can get more expensive every year as the demand for residential real estate continues with its upward trend. This trend is expected to hold even after the pandemic so it would be prudent to explore the favorable factors for real estate buying at this time. These include lower mortgage interest rates, opportunities in the foreclosed property market, and flexible rates from developers and sellers.