According to a study seen in the Bergen Record – found here on NorthJersey.com – home prices in Bergen County became more affordable than has been the case in many years. The study shows that home prices have declined and are typically south of $400,000. And, with mortgage rates less than 4 percent, the market has reached the point where a majority of buyers can purchase a home in the average price range.

The Record story highlights a young couple, Joshua and Hilary Baris, who purchased their Tenafly home for $660,000, far less than the asking price of $800,000. There are two inferences to draw from these kinds of stories. First, an increasing number of buyers in the middle-income bracket can afford real estate in Bergen County. According to David Blitzer, an economist at Standard and Poors, “There was a point a few years ago where you had to be pretty rich to afford a house in this area. Now, you don’t have to be so rich.”

The second inference from the data in the study is that we may have reached a point where home values have started to become stable.

The housing market benefits from stability in a couple of ways (at least). One, it brings potential buyers, those who have been waiting for prices to decline even farther, off the sidelines. Second, stability helps sellers set prices in line with true market levels, which in turn benefits buyers, allowing transactions to occur more rapidly. In a word, buyers and sellers can reach agreement more quickly in a stable market.

According the Record’s study, the median home price in Bergen County in 2007 was $465,000 while in 2011 it was $392,000. Median income also dropped during this same time period (from $89,550 to $87,400) but fortunately, the drop in median housing prices represents a far greater percentage of change.

Interestingly, according to the study, in 2007 the percentage of household income required to pay for housing was 40.7% but by 2011 this percentage had dropped to 37.8%. In dollar terms (on a monthly basis) this difference is typically $700 per month! Any time that one’s housing dollar buys more house or if takes a smaller percentage of income to afford a home, it’s good news.

Two trends have intersected to bring about increased home affordability: decreased prices and low mortgage rates. Since 2006, home prices have dropped by 15 to 30 percent in many places while mortgage rates have hit all-time lows. But the housing market is dynamic, and since more households are in position to purchase a home, it’s likely that prices will not continue to drop. Fiserv, a company that studies the housing market, anticipates a 1% decrease in homes prices during 2012 while they expect 2013 to see flat prices. A similar view is presented by East Brunswick appraiser Jeffrey Otteau, who sees New Jersey home prices to increase slightly during the remainder of 2012.

Buyers and sellers alike should bear in mind that, while home prices may be stabilizing and mortgage rates are at historic lows, this situation will probably not hold in the long term. For now, the Federal Reserve has indicated that it expects to maintain interest rates at “exceptionally low levels” through late 2014 (the Fed doesn’t set mortgage rates, but home loans tend usually follow Treasury securities). But at some point, count on mortgage rates to rise.

What’s the takeway? For buyers, now may be an excellent time to buy a home if you can afford it. For sellers, now is probably a good time to sell at a reasonable price before interest rates rise and effectively shrink the buyer pool.