Housing Affordability

Ashley Villers
Jun 17, 2015
2 min read

Housing affordability is down from a year ago as higher prices continue to outpace incomes, according to the National Association of REALTORS® Economists' Outlook blog.

A look at housing affordability across the country paints a picture of two stark contrasts, one very high and the other very low, according to realtor.com®’s new Mortgage Affordability Report, which gauged affordability by culling data from 25 of the largest housing markets.

“Over the last 10 years, we have seen marketplace gyrations ranging from bubble to burst to recovery to stabilization, and we are now seeing a market of extremes on the affordability front,” says Jonathan Smoke, realtor.com®’s chief economist. “Buyers, especially first-time home buyers, might feel more motivated as the overall market continues to improve.”

Nationwide, by the end of this year, households will likely need to spend 27.6 percent of the median family household income of $55,533 to purchase a median priced home with a 30-year fixed-rate mortgage, according to the report. Rents are expected to require 29.5 percent of income.

"Affordability is greatly impacted by mortgage rates, so waiting a year to buy as affordability declines may force home buyers to consider alternative options such as hybrid-adjustable mortgages that have lower rates," Smoke says.

Nationally, the median single-family home price is $221,000, up 10 percent from April 2014, NAR reports. The Midwest has seen some of the largest increases in home prices – climbing 11.6 percent in the past year alone. The Northeast, on the other hand, is seeing the slowest price growth regionally at 4.9 percent in the past year.

"In other regions, the decline from a year ago was relatively small as mortgage rates lower than a year ago helped but could not completely offset increases in home prices," NAR finds.

But mortgage rates are on their way up. Freddie Mac reported last week that the 30-year fixed-rate mortgage set a new high for 2015, averaging above 4 percent for the first time in nearly a year.

"This may be a good time for return and first-time home buyers to surge back into the housing market before rates climb higher, further reducing affordability," NAR notes.

For more advice about buying and selling real estate in and around Denton and Wise Counties, visit GDWCAR.com or TexasRealEstate.com.