Renting or Buying, According to forecast, the first of the year has
been fraught with weaker affordability, though higher mortgage rates and home prices, as well as low levels of new and existing homes for sale. “This, in turn, has kept the sales growth in check despite the fact that the healthy economy is generating solid levels of demand,” the study found.
The share of income needed for monthly mortgage payments on the median U.S. home increased to 17.1 percent from Q4 of 2017 and compares to 2009's 17.5 percent in the year's second quarter.
“Back then, the trend was different.” “Mortgages were becoming more affordable as home prices and interest rates fell in tandem during the early years of the recession, well after the share of income needed to afford the typical home peaked at 25.4 percent in 2006 during the height of the bubble.”
“The affordability edge has worn so thin in nine of the 35 largest housing markets that mortgage payments are now a bigger financial burden than they were historically.”
While rising mortgage rates are one of the key factors to affect total originations, the ongoing housing supply crunch is the other headwind that’s affecting not only homebuyers but the mortgage market also.
“If mortgage rates reach 5 percent next year, as many economists expect,” “home shoppers in an additional seven markets would face greater mortgage burdens than buyers did historically.”
Following the most recent trends involving least affordable markets, the West Coast leads the pack
in burdened households. In the Bay Area, the least affordable metro in Q1, homeowners, and renters in Q1 paid as much as 68 percent of their income towards household expenses; and in San Jose, mortgage holders paid 51 percent towards mortgage payments. That's high even for San Jose, where the historical average is around 35 percent.
The issue stems from the one-two punch of rising mortgage rates and continuing home value appreciation. But, “mortgage rates and housing costs represent one side of the affordability coin; income is the other.”
Times are even harder for renters. The typical renter paid 28.8 percent of U.S. median income in the first quarter. That's up from 26 percent between 1985 and 2000, but down from a peak of about 30 percent in the second quarter of 2015.
Despite a low season in the first half of the year, the Freddie Mac forecast predicts an increase of 2.8
percent in home sales by the end of the year, whereas home price appreciation is likely to end the year at 6.6 percent.
Homeowners have come out winners in this tough, competitive market “Rising home values continue to build [homeowners’] household wealth, and those who decided to sell likely found a buyer very quickly.”
“Meanwhile prospective buyers are active and looking in most markets but supply is low, competition is swift and higher mortgage rates and home prices are squeezing the budget of some prospective buyers.”
The forecast revealed that supply and demand imbalances are keeping home sales in check and causing prices to increase at a swift pace. In the meantime, mortgage rates expected to touch 4.9 percent by the end of 2018, the forecast projected.
Are you Ready to get Started? We have a wealth of information and 18 years of experience to help you get started. Visit us at WWW.PrecisionReal-T.com or if you prefer a more personal touch Call us today at 801 809-9866.
#RealEstateForSale #Homeownership #UtahRealEstate #MorgageRates
The share of income needed for monthly mortgage payments on the median U.S. home increased to 17.1 percent from Q4 of 2017 and compares to 2009's 17.5 percent in the year's second quarter.
“Back then, the trend was different.” “Mortgages were becoming more affordable as home prices and interest rates fell in tandem during the early years of the recession, well after the share of income needed to afford the typical home peaked at 25.4 percent in 2006 during the height of the bubble.”
“The affordability edge has worn so thin in nine of the 35 largest housing markets that mortgage payments are now a bigger financial burden than they were historically.”While rising mortgage rates are one of the key factors to affect total originations, the ongoing housing supply crunch is the other headwind that’s affecting not only homebuyers but the mortgage market also.
“If mortgage rates reach 5 percent next year, as many economists expect,” “home shoppers in an additional seven markets would face greater mortgage burdens than buyers did historically.”
Following the most recent trends involving least affordable markets, the West Coast leads the pack
in burdened households. In the Bay Area, the least affordable metro in Q1, homeowners, and renters in Q1 paid as much as 68 percent of their income towards household expenses; and in San Jose, mortgage holders paid 51 percent towards mortgage payments. That's high even for San Jose, where the historical average is around 35 percent.The issue stems from the one-two punch of rising mortgage rates and continuing home value appreciation. But, “mortgage rates and housing costs represent one side of the affordability coin; income is the other.”
Times are even harder for renters. The typical renter paid 28.8 percent of U.S. median income in the first quarter. That's up from 26 percent between 1985 and 2000, but down from a peak of about 30 percent in the second quarter of 2015.
Despite a low season in the first half of the year, the Freddie Mac forecast predicts an increase of 2.8
percent in home sales by the end of the year, whereas home price appreciation is likely to end the year at 6.6 percent.Homeowners have come out winners in this tough, competitive market “Rising home values continue to build [homeowners’] household wealth, and those who decided to sell likely found a buyer very quickly.”
“Meanwhile prospective buyers are active and looking in most markets but supply is low, competition is swift and higher mortgage rates and home prices are squeezing the budget of some prospective buyers.”
The forecast revealed that supply and demand imbalances are keeping home sales in check and causing prices to increase at a swift pace. In the meantime, mortgage rates expected to touch 4.9 percent by the end of 2018, the forecast projected.
Are you Ready to get Started? We have a wealth of information and 18 years of experience to help you get started. Visit us at WWW.PrecisionReal-T.com or if you prefer a more personal touch Call us today at 801 809-9866.
#RealEstateForSale #Homeownership #UtahRealEstate #MorgageRates
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