Tag Archives: Affordability

After working a lifetime to finally reach the lazy days of retirement, a homeowner is more than likely looking to downsize and move somewhere more suitable to their ...

Two primary reasons are cited as to why the industry is raising prices so rapidly. One, the frequency of large storms is increasing. Two, the cost of covering the insured damage from these storms is also rising. What is less well-known is the proverbial “rest of the story.” The rest of the story is how these rapid increases in insurance prices have hurt consumers and benefited the industry.

Today’s ever-increasing home prices have made their mark: Buying a home is now unaffordable in more than half of the nation’s biggest markets. And in California? The straits are even more dire. According new analysis, the median price of homes for sale is historically higher than average in the majority of America’s largest metros, meaning buyers need to devote a larger-than-expected share of income toward mortgage payments and, more significantly, down payments.

A new study by Redfin shows that affordability for middle-class homebuyers has dropped noticeably in the past four years. African-American and Hispanic household earning median salaries are being hit especially hard. Last year, minority buyers could afford fewer than five percent of homes for sale in several markets.

Potential home sales fell by 0.2 percent to 5.69 million in April, according to a recent study. This represents an 89.3 percent increase from the market potential low point reached in December 2008. What the study found is that strong consumer demand fueled gains in market potential for existing home sales, but this was offset by high prices and falling affordability.

Housing affordability is finally starting to improve. According to a new index, affordability is up from Q4 of 2016. More than 60 percent of all homes sold in Q1 were affordable for the nation's median income of $68K.

First American’s Real House Price Index (RHPI) for February 2017 showed home prices remaining strong. The low inventory has meant that home prices have remained high. Additionally, the RHPI noted that rising wages have offset the impact of rising home prices and mortgage rates on affordability. Wages have grown by 2.8 percent in February.

Home sales should remain strong as the year goes on, even despite rising mortgage rates, tight inventory, and declining affordability. Potential existing-home sales rose 0.6 percent over the year and 83 percent over their all-time high. Wage growth, strong employment, and an uptick in building permits will encourage sales further.

With real house prices on the rise and inventory low, spring is poised to be a seller’s market, according to First American. Real home prices rose more than 8 percent over the year, with Jacksonville, Florida, seeing the most growth annually. According to First American Chief Economist Mark Fleming, “on a year-over-year basis, real house prices increase in all the metropolitan areas tracked . . .”

Higher interest rates have caused some prospective homebuyers to consider buying a smaller home or a home in a less affluent neighborhood.