In practical terms, what does that mean? If your household income is $100,000 or less, that means a home-buying budget that tops out at $300,000.
Don’t get taken in by blather about low interest rates and how you can afford to buy more home than you would have a few years ago. Instead, those low rates are helping inflate the prices of homes across the board, so you are effectively spending more money to buy the same house.
Check out this Wall Street Journal piece, which asked financial planners to give advice to home buyers looking to jump into the market in 2014.
Too often real estate agents are the ones doling out advice in these sorts of columns and they invariably focus on the tactics of buying or selling or whether it’s a good time to buy now.
By contrast, the wealth and investment managers quizzed by the Journal weren’t playing that game – it was all about affordability and staying well within your budget.
“Look for a house that costs less than what you afford,” writes Charles Rotblut, vice president of the American Association of Individual Investors, in the Journal piece.
Who would you rather take real estate advice from? A veteran agent or a financial planner?