As housing markets heat up in some of the most popular metros across the country, many buyers are opting to cut their ties and purchase a home in more affordable cities.
Hot housing markets come with a big price, causing homeowners to flock to lower-priced markets in the South and Northwest.
A report from John Burns Real Estate Consulting [1] showed that buyers are leaving New York, Chicago, Boston, and Philadelphia and moving to places like Portland, Seattle, and the many more affordable markets in the South.
"Despite what we hear about the urbanization of America, more Americans are heading for the newer, more affordable housing markets than the expensive, mature urban centers," said Annie Radecki, Senior Manager at John Burn Real Estate Consulting.
Many industry experts and economists believe that U.S. housing markets are in the midst of an affordability crisis that will only get worse over time, but what if today's rising home prices were not as buyers may think.
Although home prices have been on the rise for the last few years, Black Knight Financial Services [2]' December 2015 Mortgage Monitor [3] found that homes are much more affordable than the were prior to the housing crisis, despite 43 consecutive months of annual home price appreciation.
According to the report, in today's mortgage market, it takes 21 percent of the median monthly household income to purchase the median priced home using a 30-year fixed rate mortgage. This amount was 33 percent at the height of the market in 2006, and is under the average of 26 percent prior to the housing bubble. It takes 20 percent less of the median income to purchase the median home today than it did from 2000 to 2002.
Black Knight Data & Analytics SVP Ben Graboske noted that "the long-term impact of rising interest rates and home prices on affordability varies with geography and warrants close observation moving forward."