Your home may not have made the same gains as stocks or bitcoin, but it still was a robust year for the U.S. housing market.
The value of the entire U.S. housing stock increased by 6.5 percent — or $2 trillion — in 2017, according to a report from Zillow. All homes in the country are now worth a cumulative $31.8 trillion.
The gain in home values was the fastest since 2013, when real estate was in the early stages of its recovery from the recession. Yet it still trails the surge in other assets, with the S&P 500 Index up about 19 percent, and bitcoin increasing exponentially.
Los Angeles is the most valuable U.S. housing market at $2.7 trillion, according to Zillow’s estimate of owner-occupied and rental homes, with New York second, at $2.6 trillion. The 10 most valuable metropolitan areas are worth $11.3 trillion combined, or 36 percent of the total value of the U.S. housing stock.
A home might be a worse investment next year, as the new federal tax law reduces key benefits to ownership. That includes a lower limit on the amount of debt eligible for the mortgage-interest deduction and a cap on state and local tax deductions. Those changes will land hardest on homeowners in coastal markets with high property values — and taxes — and could lead to price declines, according to the National Association of Realtors.
How Much House Can Your Afford?
Before you start shopping for a new home, determine how much you can afford to spend. Your full mortgage payment cannot exceed a third of your gross monthly income. So if your monthly gross income is $3,000 than your mortgage payment should not exceed $1,000 including (PITI) Principal, Interest, Taxes and Insurance.
Here are few things to consider:
- Your monthly income
- Your available funds for down payment
- Your monthly expenses
- Your credit score
It’s very important to consider getting pre-approved from a licensed mortgage professional. An Independent Mortgage Professional such as a Mortgage Broker will be able to offer you several loan options and find you the best available loan programs for your needs. Call today to speak with a Mortgage Professional and get a Pre-Approval (702) 507-4170