The Change in Housing Affordability Year-Over-Year as of January | Topouzis & Associates, P.C.


April 19, 2019

The Change in Housing Affordability Year-Over-Year as of January

The Change in Housing Affordability Year-Over-Year as of January

Heading into the latter portion of 2018 we saw housing inventory tick upward, which resulted in fewer offers per home and what many of us referred to as a “cooling” of the possibly-overheated housing market we had seen for the previous few years. Prices are rising, but at a much less pitched rate.

One might be tempted to think this has shifted us into a buyer’s market. But there’s more to the equation than just inventory. Mortgage rates also have a great deal to do with how much house a potential homeowner can afford. And, since during this same period mortgage rates were on the rise, the fact of the matter is something different. According to a late-December report by Zillow, the rise in rates—a jump of 0.7 percent—was enough to remove a significant number of houses from availability to those who might have been able to afford them at the same time last year. Which is to say, in the words of a writer at The M Report,

A homebuyer who could have bought a home valued at $393,700 in January 2018, is likely to afford a home worth $372,000 today [when the rate was 4.63 percent], to keep their monthly payment the same as they would have in the beginning of last year, when mortgage rates were at 4.15 percent….

Moreover, the authors of the Zillow report project that rates may rise to 5.5 percent by the end of the year, which would push the average homebuyer looking to put no more than 30 percent of their income into housing payments to cut around $35,000 from the cost of a home they could reasonably afford. This would reduce the available number of houses at market available to them at a rate of 5.4 percent—meaning that just under 32,000 homes currently at market would no longer be within their list of possible purchases.

In other words, the time to buy is now. At Topouzis & Associates, P.C., we perform title searches and remedy problems with title in Massachusetts, Rhode Island and Florida. We back these services with title insurance for both lenders and owners. Contact us if you’re considering purchasing a new property, whether for yourself or as an investment, so we can help ensure that you achieve true ownership without having to deal with unforeseen hassles arising from problems created by someone else in the past.