Posted: March 25th, 2024
As a mortgage broker, I've observed a concerning trend in the housing market that is impacting affordability for buyers. Despite some relief in mortgage rates, home prices continue to surge, making it increasingly difficult for potential buyers to enter the market.
Based on data from First American Financial Corp., affordability in November hit a historic low not seen in over thirty years. The Real House Price Index (RHPI) reveals a startling 11% year-over-year increase in November, driven by rising mortgage rates and a substantial jump in nominal home prices.
Unfortunately, median household earnings have failed to keep pace with these price hikes and interest rate changes. Adjusted consumer homebuying power has decreased by 3.3% annually, further exacerbating the affordability crisis. In fact, when adjusting for consumer homebuying power, house prices are now 7.7% above their peak during the 2006 housing boom.
Despite expectations that higher mortgage rates would temper price growth, the opposite has occurred. Housing demand continues to outstrip supply, leading to persistent price increases. Even in markets where prices briefly dipped, such as Sacramento, they have quickly rebounded, leaving potential buyers grappling with overvalued properties.
The scarcity of housing inventory, compounded by the inertia caused by high mortgage rates, has prevented any significant downward adjustment in prices. This challenging environment underscores the urgent need for action to address affordability issues in the housing market.
If you're considering purchasing a home, now is the time to explore your options and take advantage of available resources. As a mortgage broker, I'm here to help navigate these challenges and find solutions tailored to your needs. Don't let affordability concerns deter you from pursuing your homeownership goals. Contact me today to learn more and take the first step towards securing your dream home.
Best regards,
Your Mohawk Mortgage Man