This was the median home sales price for December. Will it work with your budget?

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Home prices are still rising and buying a home today can be difficult.

Over the past few months, home price gains have steadily declined. But that doesn’t mean the house is cheaper. In fact, home prices are still quite high at the national level.

Certainly, sellers aren’t getting away with the extremely high prices they did in the first half of 2021 and 2022.

In fact, according to the National Association of Realtors (NAR), the median price for existing homes (as opposed to new construction) sold in December was $366,900. That’s a 2.3% increase from a year ago.

Today, that increase may seem insignificant. But remember, a year ago mortgage rates were much lower than they are today. So the $366,900 home may not be affordable right now, just with higher borrowing rates. Ultimately, though, you’ll have to work through the numbers to see if you can afford it.

Is a $366,900 home within reach?

Let’s get out of the way. The median home sale price in December may have been $366,900, but that’s not necessarily the price of homes for sale in the area or city you want to live in. Or it might cost him three times as much at $366,900.

In any case, there is a simple formula you can use to determine if a home is affordable regardless of its cost. Just don’t exceed 30% of the

So let’s say you take home $4,000 a month with your salary after taxes and other deductions (such as contributions to your retirement plan). That means $1,200 a month is free to spend on housing. If you can keep your housing costs within that limit, you should be in a pretty strong position to buy.

However, just to be clear, when we talk about housing costs in this context, we’re not just talking about mortgage payments. Pre-configured and predictable costs such as fees should also be included in the calculation.

For example, let’s say you’re buying a house with monthly mortgage payments of $1,000. Unless he’s confident he can keep the rest of the costs under $200, the house is probably out of reach financially for now.

Of course, there are some exceptions to the rule. That’s a big savings when buying a home in a city where you can not have a car. So, in that scenario, you might be fine spending around 35% to 40% of your income on housing. But otherwise, sticking to the 30% rule is probably your best bet if you want to avoid a scenario where your home becomes poorer and falls behind other bills.

Will house prices fall in 2023?

we really don’t know. As of December, the NAR had just 2.9 months of housing supply on the market. Four to six months of supply is typically required to fully satisfy buyer demand.

If inventories remain low, house prices may remain high. So before predicting house prices, you should see if listings will recover over the next 12 months.