Reports show improving affordability
Homebuyers are enjoying increased affordability — at least according to two new reports released last week. Affordability is up most notably in some of the nation’s higher-priced markets, including many along the West Coast.
Housing is more affordable than buyers think
According to the latest Housing and Mortgage Market Review released by Arch MI, “housing isn’t as expensive as you think.”
“Housing affordability is actually better now than its historic norms in most states and remains far better than the worst point for each state since 1990,” explains Ralph DeFranco, Arch MI’s global chief economist. “This may be surprising because we tend to focus on home prices rather than affordability. Affordability accounts for the offsetting factors of low interest rates and a 28% increase in median household income since 2012.”
Analysis in the HaMMR shows the majority of U.S. states require homebuyers to spend less than the recommended 30% of their monthly income on housing costs. In states like Arkansas, Iowa, Oklahoma, and West Virginia, it’s less than 20% — the all-time most affordable level for most of them.
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But housing affordability hasn’t just improved in the long run. According to a second report from title insurance firm First American, there’s also been serious movement over the last year.
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The improvements were biggest in three cities in California: San Jose, Riverside, and San Francisco. It also became considerably more affordable to buy a house in Baltimore and Denver as well.
House-buying power jumped 22% in Baltimore and 21% in Riverside. It also improved in Los Angeles, Portland, Dallas, Boston, and Washington D.C. Overall affordability improved in all 44 markets tracked by First American.
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