By Gino Blefari, President & CEO, Intero Real Estate Services, Inc.
For instance, some housing markets are either chugging along slowly or still struggling to get values up to a level that pulls more local homeowners out of low or no equity situations. And other markets are so hot that you’d think the downturn never happened.
One of the statistics that is strikingly different in individual markets right now is affordability.
In some markets, we’re still seeing some of the most affordable housing situations in decades. But in other markets where prices have risen more rapidly, affordability has already become an issue once again, pricing out some families.
John Burns Real Estate Consulting this month released data showing the share of median household income devoted to home mortgage payments recently surpassed historical averages in six of 30 major U.S. housing markets.
Five of the markets were in California – San Francisco, Los Angeles, Orange County, San Jose and San Diego. The sixth was Portland, Ore.
Burns said that during the downturn, prices in those cities were more affordable than their historical averages dating back to 1980. But prices have risen rather quickly along with the recovery.
Couple that fact with rising interest rates on mortgages and it’s potentially a dangerous mix for first-time buyers in these markets who may struggle to get the right price point. Rates are still really low by historic standards, but a slight increase can make a huge difference in affordability for many families.
This new state of affordability for the six markets identified by John Burns should be a red flag for buyers who may be on the cusp. There’s no time like today to make a move. Economists expect rates on mortgages to keep climbing. And in markets facing restricted supply, values will continue to increase a fast clip due to demand.
We will continue to watch these six markets, as well as the recovery at the national level. But for now, it seems like an obvious time to say “Carpe diem!” if you’ve been waiting to buy your first home.