Housing affordability has plummeted since 2018

0
62

[ad_1]

Home affordability fell in April at the fastest pace since December 2018 and is not going to improve anytime soon, according to First American.

The Property Price Index – a measure that adjusts residential property prices based on income and interest rate fluctuations – rose 0.7% from March and 7% from the same period last year. When the RHPI rises, the home’s affordability for the buyer drops. Median household income increased to $ 74,249 from $ 73,455 per month and $ 70,542 per year, while the purchasing power of a home jumped to $ 505,904 from $ 499,060 a month earlier and $ 465,906 in April 2020.

Despite the fact that purchasing power has been growing for the 16th month in a row, it has not kept pace with the 16.2% increase in house prices compared to last year, and this is a likely trend that is developing. These growth rates must change for consumer affordability to increase, but the combination growth in mortgage rates and a low inventory environment should continue to accelerate in the same direction. The steady rise in property prices has also pose a risk to borrowers.

Under current conditions, household income should increase by 5% to compensate projected rise in interest rates by the end of 2021, according to America’s first chief economist, Mark Fleming.

“While the nominal rise in house prices could die due to affordability put pressure on buyers who is on the edge serious imbalance between supply and demand means that the housing market is unlikely cool enough to lead to significant improvements in accessibility, ”says the Fleming report. “It will take years for the proposal to catch up. demand and meanwhile any new housing inventory will be very quickly absorbed by the existing demand. “

Arizona topped all states with an annual RHPI growth of 18.3%, ahead of Washington by 16.1%, Vermont at 15.3% and Wyoming at 15.2%. None of the states saw a year-on-year decline in RHPI in April, but Kentucky grew at 2.3%, followed by 2.9% in Iowa and 3.5% in Illinois.

Among the 50 largest housing markets, RHPI grew the most in Phoenix at 20.8%, Kansas City, Missouri at 20.52%, Seattle at 18.21% and Tampa, Florida at 16.55%. San Francisco alone has dropped since April 2020, down 0.68%, followed by 0.43% gains in Riverside, California, and 1.74% in Miami – a modest gain that brings home. buying is cheaper than renting metro in these areas.



[ad_2]

Source link