Home Affordability – Is It Heading Out of Reach For Many?
If anyone has been following the real estate market for the last year or so, then it is obvious that home prices have risen dramatically in such a short period of time. While that is encouraging for homeowners it is posing a problem for many would be buyers.
The article below shows the conflicting views of
"The sharp rise in home prices in 2013 caused two conflicting results: The return of positive home equity for hundreds of thousands of borrowers and considerably weaker affordability for an equally large pool of potential homebuyers.
While positive equity allows more borrowers to move, weaker affordability keeps them in place. So which will be the greater driver of housing this spring?
"There's going to be a reality check in the spring in terms of realizing that what we saw in 2013 is not a real market," said Daren Blomquist of RealtyTrac, a real estate sales and data website. "It's a nice bounce-back market, but ultimately you need the biggest pool of potential homebuyers out there to be able to afford those homes."
In an analysis of housing affordability, RealtyTrac found that the estimated monthly house payment for a median-priced, three-bedroom home purchased at the end of 2013 was a whopping 21 percent higher than it was at the end of 2012 in more than 300 U.S. counties. That includes mortgage, insurance, taxes, maintenance and the subtracted income tax benefit.
The rise is the result of higher home prices and higher mortgage rates. RealtyTrac used a 30-year fixed-rate mortgage with an interest rate of 4.46 percent and a 20 percent down payment. That is versus a 3.35 percent interest rate the previous year.
Some metro regions, especially in California and parts of Michigan, saw monthly house payments rise about 50 percent from a year ago.
"Home prices were boosted by cash buyers in 2013, and as the cash buyers move out of the market in 2014, the buyers left are not going to be able to afford the home prices as readily in some of these markets," added Blomquist." Source CAR
So far in our local San Ramon Valley market what we are experiencing is a slow down in the frenzy. While there are still multiple offers, the prices in general are coming in closer to list price and there is still a lot of qualified buyers ready to purchase a home.
Tagged with: real estate market san ramon valley
Filed under: Market Data
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