Showings are holding strong, in line with the last two years. Case in point, the house in the photo below became Active in the MLS today… and we already have 13 showings scheduled plus an open house tomorrow that will likely bring at least that many additional potential buyers.
New and pending listings are holding steady, but after a huge jump in coming soon listings last week they have dropped back to more ‘normal’ levels this week. The week of April 10-16 was predicted as the best week to list your house this year… coming soon listings made a strong showing, supporting continued new listings.
The year continues to follow a normal arc… but it would be nice to see numbers competing with or exceeding previous years rather than hanging below.
Home sales are strongly affected by affordability, and the continued shortage of homes for sale in spite of the strong blips the last few weeks are at least partially the result of that impact. Some sellers are feeling locked in by their current low interest rate… they don’t want to trade a new home for higher interest rates.
The article below from our blog at Keeping Current Matters addresses the primary factors affecting interest rates right now.
Sharlene Hensrud, RE/MAX Results – shensrud@homesmsp.com
The Three Factors Affecting Home Affordability Today
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There’s been a lot of focus on higher mortgage rates and how they’re creating affordability challenges for today’s homebuyers. It’s true that rates climbed dramatically since the record-low we saw during the pandemic. But home affordability is based on more than just mortgage rates – it’s determined by a combination of mortgage rates, home prices, and wages.
Considering how each one of these factors is changing gives you the full picture of home affordability today. Here’s the latest.
1. Mortgage Rates
While mortgage rates are higher than they were a year ago, they’ve hovered primarily between 6% and 7% for nearly eight months now (see graph below):
As the graph shows, mortgage rates have experienced some volatility during that time. And even a small change in mortgage rates impacts your purchasing power. That’s why it’s so important to lean on your team of real estate professionals for expert advice to stay up to date on what’s happening in the market. While it’s hard to project where mortgage rates will go from here, many experts agree they’ll likely continue to remain around 6%-7% in the immediate future.
2. Home Prices
Over the past few years, home prices appreciated rapidly as the record-low mortgage rates we saw during the pandemic led to a surge in buyer demand. The heightened buyer demand happened while the supply of homes for sale was at record lows, and that imbalance put upward pressure on home prices. However, today’s higher mortgage rates have slowed down price appreciation.
And, the truth is, home price appreciation varies by market. Some areas are seeing slight declines while others have prices that are climbing. As Selma Hepp, Chief Economist at CoreLogic, explains:
“The divergence in home price changes across the U.S. reflects a tale of two housing markets. Declines in the West are due to the tech industry slowdown and a severe lack of affordability after decades of undersupply. The consistent gains in the Southeast and South reflect strong job markets, in-migration patterns and relative affordability due to new home construction.”
To find out what’s happening with prices in your local market, reach out to a trusted real estate agent.
3. Wages
The most positive factor in affordability right now is rising income. The graph below uses data from the Bureau of Labor Statistics (BLS) to show how wages have grown over time:
Higher wages improve affordability because they reduce the percentage of your income it takes to pay your mortgage since you don’t have to put as much of your paycheck toward your monthly housing cost.
Home affordability comes down to a combination of rates, prices, and wages. If you have questions or want to learn more, reach out to a real estate professional who can explain what’s happening locally and how these factors work together.
Bottom Line
If you’re planning to buy a home, knowing the key factors that impact affordability is important so you can make an informed decision. To stay up to date on the latest on each, let’s connect today.
