Even With Record-Low Rates, Most Metros Aren’t Affordable

first_img in Daily Dose, Featured, Market Studies, News Even With Record-Low Rates, Most Metros Aren’t Affordable Share Save Related Articles The Best Markets For Residential Property Investors 2 days ago Home / Daily Dose / Even With Record-Low Rates, Most Metros Aren’t Affordable 2021-02-12 Christina Hughes Babb  Print This Post Servicers Navigate the Post-Pandemic World 2 days ago Data Provider Black Knight to Acquire Top of Mind 2 days ago The Best Markets For Residential Property Investors 2 days ago February 12, 2021 882 Views Data Provider Black Knight to Acquire Top of Mind 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago Veronica Bradley has covered the consumer packaged goods industry, the tech industry, the healthcare industry, and a few other industries that impact people’s daily lives. When she isn’t researching and writing, she moonlights as an amateur accountant and bookkeeper for a small family brewpub, because unlike most writers, she isn’t afraid of numbers. Servicers Navigate the Post-Pandemic World 2 days ago The Week Ahead: Nearing the Forbearance Exit 2 days ago Demand Propels Home Prices Upward 2 days ago Demand Propels Home Prices Upward 2 days ago Governmental Measures Target Expanded Access to Affordable Housing 2 days ago About Author: Veronica Bradley Previous: The Week Ahead: Mortgage Servicing in Coming Months Next: 4 Hallmarks of an Exceptions SFR Services Provider Interest rates on 30-year mortgages are at historic lows, but that hasn’t helped make homes any more affordable for the average American, according to the Federal Reserve Bank of Atlanta’s Home Ownership Affordability Monitor (HOAM) index.Household incomes have dipped, and home prices have risen all over the country. In fact, the median household income at the end of November was down 5.4% from the same time the year before. And in contrast, the national median home price went up 14.1% in the same amount of time.Yes, rates on fixed 30-year mortgages may have dropped to 2.8% by November’s end, but the financial strain on the average household income and the rise in home prices have erased any positive effects from lower rates, according to the index.In other words, the median-priced home is simply unaffordable to the median-income buyer.However, these are national averages. There are pockets of the country where homes are still affordable, even in populous metro areas.Rochester, New York; Washington’s Spokane-Spokane Valley; and St. Louis, Missouri, all have populations over 500,000 and saw improvements in affordability (7.08 percent, 7.02 percent, and 6.63 percent, respectively). This is due to the lower interest rate and declining home prices.Washington, DC and San Francisco, California, also saw small increases in affordability, because home prices remained stable.To counter those cities, Milwaukee, Wisconsin; the New York metro area; and Cape Coral, Florida, all experienced the biggest drop in affordability (4.15 percent, 2.03 percent, and 1.85 percent, respectively). Home price growth in these areas outpaced any financial perks of lower interest rates. In fact, the median home price in Milwaukee climbed 19.9% over a year’s time, New York’s median price increased 11.9%, and Cape Coral’s price went up 15.9%.So, why have homes priced themselves out of affordability across the country? Supply and demand. There simply aren’t enough homes available for eager buyers, and bidding wars ensued. Those with deeper pockets won, and that drove up the cost of homes around them.December of 2020 saw a 23% drop in inventory, for example, and the supply shortage won’t be fixed in the near future, which means affordability will continue to be a problem for some time. Sign up for DS News Daily Subscribelast_img

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