Right now, headlines suggest that homes have become unaffordable for most Americans. But in reality, evidence shows that owning a home is more affordable than renting in most parts of the country. Record-low interest rates are keeping monthly mortgage payments about 23% lower than the payment of 20 years ago.

In a recent survey by realtor.com, home buyers indicated that they were surprised by what they could afford when buying their first home. As many as 47% discovered their budget was larger than they expected.

Why do these negative headlines persist? Most analysts only look at price and income. It is true that income hasn’t kept up with home prices. However, affordability is about the cost of the home, not just the price. So mortgage rates, which is another element of the affordability question are important to consider.

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