Make Money From Home

Home Prices Rose 25% in Just 2 Years – The Motley Fool

Image source: Getty Images

Talk about a massive jump.


Image source: Getty Images

Talk about a massive jump.

Key points

  • The median listing price for homes in January was $375,000.
  • That represents a 25% increase from January 2020.

Buying a home has been a challenge for the past year for one big reason — there isn’t enough inventory to go around, and that’s caused housing prices to soar. In January, the median listing price for homes was $375,000, reports That accounts for a 10.3% uptick from the previous January. It’s also a whopping 25% increase in home prices from January 2020.

Not only are home prices up, but transactions are happening at lightning speed. In January, the typical home spent just 61 days on the market. That’s down 10 days from January 2021 and down 24 days from January 2020.

If you’re hoping to buy a home in the near term, you may face your share of challenges due to current market conditions. Here’s how to know if homeownership is actually within reach.

Run those numbers

As a general rule, it’s a good idea to keep your housing costs to 30% of your take-home pay or less. And that 30% shouldn’t just include your mortgage payment. It should also include predictable expenses like property taxes, homeowners insurance, and HOA fees, if you’re buying a home that comes with them.

To see if you can swing a home given today’s market conditions, you’ll need to use a mortgage calculator to make sure your expenses fit into your budget. If they don’t, it pays to consider waiting.

So, let’s assume that based on today’s mortgage rates, the average price of a home in the neighborhood you’re trying to buy in, and the amount of money you have available for a down payment, you’re looking at a monthly payment of $2,000 for principal and interest on a mortgage. Let’s also assume you won’t pay HOA fees but will pay another $500 a month in property taxes and insurance.

All told, that’s $2,500. That means you’d need to bring home $8,333 a month to make homeownership affordable for you.

If your take-home pay is lower, it means you may need to change your plans. That could mean looking in a different neighborhood, buying a smaller home, or postponing your plans to purchase a home until prices come down or you’ve socked away more money to put toward a down payment.

Will home prices go lower in 2022?

A big reason home …….


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