There’s never been a better time to buy a home — at least not in the last three years. According to a new analysis, housing affordability has officially increased for the first time since 2016.
Housing affordability is on the rise
According to a new analysis from First American, national housing affordability has finally increased, marking the first time in three years it’s seen a jump.
As Mark Fleming, First American’s chief economist, explains, “What began as a modest shift toward a buyers’ market in six cities last month has expanded into a national shift in affordability.”
The reason behind the increased affordability is three-fold, with slowing home price growth, rising household income and declining mortgage rates all playing a role. Mortgage rates officially dipped below 4 percent last week, according to Freddie Mac, and home price appreciation has been slowing down for a full year. In the meantime, household income grew 3 percent over the year.
Where affordability is up the most
First American’s analysis shows that 15 of the 44 biggest metros have seen “real” home prices decline. These prices factor in local incomes, interest rates and nominal home prices.
The biggest dips in real home prices were seen in San Jose, California (with prices down 7.6 percent); Seattle (-6.4 percent); San Francisco (-4.4 percent); Portland, Oregon (-3.9 percent); and Los Angeles (-3.1 percent).
At the state levels, Wyoming, West Virginia, Louisiana, Alabama and Oklahoma saw the biggest dips.
“Given the trend nationally, it’s no surprise that more markets experienced falling real house prices,” Fleming said. “The clear trend is affordability levels are improving in more parts of the country.”
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