A boost in affordability
Thanks to lower mortgage rates and rising incomes, housing affordability is actually up for the first time in years. And in five lucky cities, it’s up quite considerably.Verify your new rate (Feb 24th, 2020)
Home prices down, housing affordability up
According to the First American Real House Price Index, “real” home prices — which factor in mortgage rates, incomes and nominal house prices — are actually down over the year. Nationally, real house prices have dropped nearly a full percentage point since April 2018, marking the first decline in almost three years.
Since their pre-recession peak, adjusted home prices have dropped more than 40 percent.
As First American Chief Economist Mark Fleming explains, “Despite the increasing rate of nominal house price appreciation, which makes homes less affordable, the consumer house-buying power gains were strong enough to win the affordability tug-of-war.”Verify your new rate (Feb 24th, 2020)
Where affordability is up the most
Though real house prices were down nationally for the money, some cities saw affordability grow more than others. In San Jose, for example, homebuying power jumped by almost 7 percent, while real home prices dipped by 8.6 percent. Seattle saw similar improvements, with homebuying power up 8.8 percent.
Other cities to see gains in affordability were San Francisco, Los Angeles and Portland, Oregon.
According to Fleming, income growth is the primary influencer in these cities’ improvements.
“One reason why these markets have seen such strong gains in affordability is because household income growth was so strong,” Fleming said. “In the top four markets, household income growth exceeded house price growth. That’s an affordability boost even without the help of falling rates.”
Get today’s mortgage rates
Are you looking to buy a home while affordability is up? Then shop around and see what mortgage rates you qualify for today.Verify your new rate (Feb 24th, 2020)