Buying a home is likely to get more affordable this spring as declining prices and mortgage rates give 6 percent more purchasing power while keeping monthly payments the same or a decrease of $62 per month in principal and interest on the average home, according to Black Knight's latest Mortgage Monitor report for January.
The report indicated that annual home price growth has slowed for 10 consecutive months falling from 6.8 percent year-over-year in February 2018 to 4.6 percent at the end of the year. As a result, the average value of a home has also decreased by $850 in December.
The declining values also indicate that it would now take 22.2 percent of median income to purchase a home with a 20 percent down payment and a 30-year fixed-rate mortgage.
The falling rates are also boosting refinance of loans, the report indicated with 3.27 million homeowners with a mortgage likely to qualify for a refinance and reduce their current interest rate at least by 0.075 percent by doing so. The report noted that the recent rate declines, which fell to 4.35 percent in February 2019, could also result in increased cash out lending, which had softened last year as "equity utilization became more expensive in 2018."
"While this is all welcome news for consumers heading into the spring home buying season, it remains to be seen whether recent rate declines and easing affordability will be enough to halt the deceleration in home price growth," said Ben Graboske, President of Black Knight's Data and Analytics Division.
While home prices are still increasing year-over-year across the nation's 100 largest markets, the report noted that home price appreciation is decelerating rapidly with the slowdown being felt most acutely on the West Coast.
California's annual home price appreciation declined from more than 10 percent in February 2018 to 3 percent in December. San Jose, Seattle, and San Francisco which were ranked first, third, and fourth respectively by annual home price appreciation in February 2018 have fallen to the bottom 25 percent of markets within the last 10 months.
Click here to read the full report.