Tag Archives: housing affordability

Buyers Gain Negotiating Power in Some Markets

Zillow research reveals hot markets where competition is letting up just in time for buyers to get ahead of rising rents and mortgage rates.

By Jeff Sorg, OnlineEd Blog

(October 30, 2018)

SEATTLEOct. 30, 2018 /PRNewswire/ — After years of competitive bidding wars and rising prices, a Zillow® data analysis shows it might finally be a good time to buy a home in many U.S. markets.

Zillow researchers looked at three factors to determine which of the largest U.S. housing markets are becoming more buyer-friendly and found that some previously prohibitively competitive markets – including Seattle and Las Vegas – have turned into the best places for buyers this winter.

The three buyer-boosting metrics we considered are:

  • An increase in the share of listings with a price cut. Price cuts indicate homes are sitting on the market longer – which means more options for buyers, less competition for homes and more room for buyers to negotiate. Many recently white-hot markets have seen large jumps in the share of for-sale listings with a price cut.
  • Projected increase in rent appreciation over the next year. Rent appreciation has slowed recently, but as mortgage affordability deteriorates due to rising mortgage rates, rents could begin to increase again as some would-be buyers put their buying plans on hold. We know that nearly half of renters consider buying while they’re looking for a home, and the potential of rising rents also factors in to when it’s a good time to buy.
  • Affordability relative to the past. We looked for markets where mortgage affordability is poor – but not worse than it was historically. With interest rates on the rise, and mortgage affordability already closing in on its historic norm, prepared buyers may want to enter the market before housing payments become historically unaffordable.

Based on those factors, these are the best places for buyers this winter:

  1. Orlando
  2. Boston
  3. Seattle
  4. Las Vegas
  5. Charlotte
  6. Columbus
  7. Portland
  8. Sacramento
  9. Minneapolis
  10. Dallas

“The housing market always lets up a little in the fall, when kids are back in school and the home shopping season wraps up for the holidays,” said Zillow Senior Economist Aaron Terrazas. “But this fall and winter are shaping up to be more favorable for those buyers who have struggled to get into the housing market for several years amid red-hot competition. Mortgage rates are rising, but will climb much further in 2019 and early 2020. As purchase affordability deteriorates, expect rents to pick back up as some would-be buyers put their plans on ice. Renters who were thinking of buying and decided to hold off may want to take another look this winter, as a steady clip of mortgage rate increases chips away at affordability and more homes become available on the market.”

[Source: Zillow press release]

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Zillow is a registered trademark of Zillow, Inc.

OnlineEd blog postings are the personal opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Finding an Affordable Home Can Feel Increasingly Out of Reach

A single homebuyer would need to save for nearly 11 years to reach a 20 percent down payment on the typical U.S. home

By Jeff Sorg, OnlineEd Blog

(February 17, 2018)

SEATTLE /PRNewswire/ — In today’s highly competitive housing market, finding an affordable home can feel increasingly out of reach, especially for singles.

A single homebuyer would need to save for nearly 11 years to reach a 20 percent down payment on the typical U.S. home, according to a new Zillow® analysis. However, for married or partnered couples, it would take less than five years. In San Jose, California, a single buyer would need more than 30 years to save for a down payment – longer than the lifespan of a typical home loan.

Zillow’s analysis combined home values and income data from Census to estimate how long it would take for both an individual and couple to save for a 20 percent down payment on the median-priced home, assuming they saved 10 percent of their income every year.

Single buyers typically have a smaller budget than couples, which leaves them with fewer homes to choose from and limits them to the most in-demand portion of the housing stock. The number of homes for sale is limited across the country, down nearly 11 percent over the past year, and nearly 18 percent for the least expensive homes. A single person could afford to buy less than half (45 percent) of the U.S. housing stock, compared to a married or partnered couple, who could afford 82 percent of all homes.

“Nearly two-thirds of Americans agree that buying a home is a central part of living the American Dream, but for unmarried or un-partnered Americans, that dream is increasingly out of reach,” said Zillow senior economist Aaron Terrazas. “Single buyers typically have more limited budgets, which means they are likely competing for lower-priced homes that are in high demand. Having two incomes allows buyers to compete in higher priced tiers where competition is not as stiff.”

The difference between what a single person could afford compared to a couple is greatest in Portland, Oregon, and Sacramento, California. In Portland, 73 percent of homes are affordable to a couple, but only 6 percent are affordable to a single buyer. For Sacramento buyers, a couple could afford 75 percent of homes while a single homebuyer could afford 8 percent of homes.

Single buyers will have it easiest in Indianapolis, where saving for a down payment takes less than eight years, and they can afford the highest share of homes among the largest American housing markets.

Years to Save for a
Down Payment

Percent of Housing
Stock Affordable

Maximum Value of
Affordable Home

Median Household
Income

Metropolitan Area

 Married /
Partnered

 Single

 Married /
Partnered

 Single

 Married /
Partnered

 Single

 Married /
Partnered

 Single

United States

4.6

10.8

82

45

$412,736

$176,098

$80,800

$34,500

New York-Northern New Jersey

7.5

18.8

64

10

$521,518

$208,055

$ 103,000

$41,200

Los Angeles-Long Beach-Anaheim, CA

13.4

26.8

24

2

$438,458

$222,589

$86,000

$42,800

Chicago, IL

4.2

10.2

91

48

$486,310

$197,020

$95,000

$39,000

Dallas-Fort Worth, TX

4.4

9.6

90

54

$440,698

$205,047

$87,800

$40,000

Philadelphia, PA

4.2

10.9

92

44

$491,885

$193,877

$99,000

$38,000

Houston, TX

4.0

8.8

91

58

$438,272

$197,571

$85,000

$39,000

Washington, DC

5.8

12.4

82

34

$652,892

$303,901

$ 129,000

$60,000

Miami-Fort Lauderdale, FL

6.6

13.9

73

31

$361,991

$172,508

$71,000

$33,700

Atlanta, GA

3.8

8.3

90

60

$440,196

$205,081

$87,000

$40,000

Boston, MA

6.8

17.6

74

10

$587,535

$228,239

$ 116,000

$45,200

San Francisco, CA

12.6

27.8

33

2

$656,277

$286,329

$ 128,000

$58,000

Detroit, MI

3.0

8.0

96

60

$453,958

$164,167

$87,400

$32,300

Riverside, CA

8.6

17.5

65

11

$367,681

$177,581

$72,300

$35,300

Phoenix, AZ

5.7

11.7

84

38

$393,648

$194,090

$77,500

$38,000

Seattle, WA

7.6

17.1

68

12

$529,317

$234,656

$ 103,200

$46,000

Minneapolis-St Paul, MN

4.6

11.1

93

39

$512,526

$209,175

$ 100,000

$41,000

San Diego, CA

11.0

22.2

40

3

$471,840

$234,123

$93,000

$46,100

St. Louis, MO

3.3

8.1

95

63

$443,217

$179,537

$88,000

$35,300

Tampa, FL

4.7

10.5

87

45

$360,353

$163,258

$71,000

$32,200

Baltimore, MD

4.6

11.2

91

42

$562,327

$229,242

$ 110,000

$45,000

Denver, CO

7.0

14.5

79

17

$495,133

$238,822

$98,000

$47,000

Pittsburgh, PA

3.1

8.1

96

63

$429,967

$162,840

$83,650

$32,000

Portland, OR

7.6

16.8

73

6

$456,201

$204,963

$89,700

$40,400

Charlotte, NC

4.0

9.5

89

51

$402,000

$172,054

$80,000

$34,000

Sacramento, CA

7.5

17.0

75

8

$459,278

$201,205

$90,000

$40,000

San Antonio, TX

4.0

8.4

93

63

$394,830

$184,231

$76,000

$36,300

Orlando, FL

5.4

10.8

87

43

$350,919

$177,219

$70,000

$35,000

Cincinnati, OH

3.3

8.5

96

61

$443,360

$171,656

$87,000

$33,600

Cleveland, OH

3.1

8.0

96

66

$403,868

$164,204

$81,300

$32,000

Kansas City, MO

3.4

8.2

96

65

$443,150

$187,805

$87,000

$36,650

Las Vegas, NV

5.5

11.4

88

38

$372,010

$182,161

$74,000

$35,800

Columbus, OH

3.6

8.3

95

62

$440,449

$192,054

$85,000

$37,440

Indianapolis, IN

3.1

7.5

96

71

$425,609

$176,828

$83,800

$35,000

San Jose, CA

14.0

30.7

22

1

$693,211

$369,555

$ 136,200

$62,200

Austin, TX

5.1

11.1

87

42

$497,165

$233,188

$99,000

$45,600

[Souce: Zillow®]

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Redfin Study: Middle-Class African-Americans and Hispanics Priced Out of Hot West Coast Markets

Fewer than five percent of homes for sale in Portland, Los Angeles, and Denver were affordable on median African-American and Hispanic incomes in 2016

By Jeff Sorg, OnlineEd Blog

(June 30, 2017)

canstockphoto1334948soldsignIn 2016, just 18 percent of homes for sale in the 30 largest U.S. metros were affordable for middle-class Hispanic families and 14 percent were affordable for African-American families, according to a new study by Redfin (www.redfin.com). Both rates were down 11 percentage points from 2012. This is compared to 30 percent affordable for those earning the median income for white households, down 12 percentage points since 2012.

Housing affordability declined over the same four-year period for the middle class as a whole, as home prices increased by 26 percent and household incomes edged up by less than 2 percent nationally. In 2012, 44 percent of homes for sale were affordable on a middle-class income; that share fell to 32 percent in 2016.

The study also found that in 2016, middle-class African-American and Hispanic families were virtually priced out of homeownership in Denver, Los Angeles, Portland, San Francisco, San Diego and Phoenix. In each of those metros, fewer than 5 percent of homes on the market were affordable on the median household incomes for African Americans and Latinos.

Still, Denver was home to the smallest racial gap in housing affordability in 2016. Less than 2 percent of homes for sale there were affordable to families earning the median income for African-American and Hispanic households, compared to just 8.3 percent for families earning the median income for white households. The racial affordability gap was largest in Minneapolis, where the typical white family could afford 66 percent of the homes for sale, compared to 5.2 percent and 24.8 percent for families earning the median income for African-American and Hispanic households.

Among the 30 largest metros, Las Vegas had the largest declines in affordability for families making the median African American (-26.5 points) or Hispanic (-24.6 points) household incomes from 2012 to 2016.

Also during this period, metros known for their relative affordability, like Atlanta, Tampa and Kansas City, saw double-digit declines in the share of listings that were affordable on African American and Hispanic median incomes.

St. Louis was the only metro that saw increases in affordability for both Hispanic (+5.4 points) and African-American families (+4.3 points). Interestingly, St. Louis was also the only metro where overall middle-class affordability, including for median-income white households, did not change significantly over this time period.

“American cities are at risk of losing both the economic and racial diversity that has been their hallmark,” said Redfin chief economist Nela Richardson. “Middle-class homebuyers are being priced out of America’s largest cities at an alarming rate, as the home affordability gap gets wider. Given the significantly lower rates of homeownership among African-American and Hispanic families, the reduction in affordable listings has even more dire consequences for income inequality when broken out by race.”

[Source: Redfin news release]

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Home Purchase Sentiment Index Moves Up in 2015

Index Closes Year on Positive Note Driven by Reported Income Growth

By Jeff Sorg, OnlineEd Blog

(c) Can Stock Photo(January 7, 2016) –  Fannie Mae’s Home Purchase Sentiment Index™ (HPSI) increased 2.4 points to 83.2 in December, capping off its strongest year thus far, as Americans’ household income prospects bounced back to levels of three months ago. The share of consumers who reported that their income was significantly higher than it was 12 months ago climbed 9 percentage points on net in December, while those who were unconcerned about losing their job rose 3 percentage points on net. Coupled with an improved financial outlook, more consumers said they believe now is a good time to sell a home – climbing 4 percentage points on net – although the share who believe now is a good time to buy remained flat in December.

“Consumers ended the year on an improved note with regard to their income, job security, and overall economic outlook. This more positive consumer sentiment brought the HPSI up a few points, moving the index up for all of 2015,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “Brightening economic prospects, if sustained, should stimulate demand for homeownership. However, continuing upward pressure on rental prices and constrained housing supply, particularly for starter homes, may mean prospective first-time homebuyers could face affordability constraints.”

COMPONENT HIGHLIGHTS

Fannie Mae’s December 2015 Home Purchase Sentiment Index (HPSI) rose 2.4 percentage points in December to 83.2. Overall, consumer sentiment about personal finances and the direction of the economy has improved since last month. Four of the six HPSI components increased in December: Household Income, Good Time to Sell, Job Security, and Home Prices. Mortgage Rate net expectations fell by 4 points, while the net share of respondents who said it is a Good Time to Buy remained at 35 percent. Overall, the HPSI is up 1.9 points since this time last year.

  • The net share of respondents who say that it is a good time to buy a house remained flat at 35%.
  • The net percentage of respondents who say it is a good time to sell a house rose after falling for two months in a row – rising 4 percentage points to 8% in December.
  • The net share of respondents who say that home prices will go up rose 2 percentage points to 40%.
  • The net share of those who say mortgage interest rates will go down continued to decrease, dropping 4 percentage points to negative 52%.
  • The net share of respondents who say they are not concerned with losing their job rose 3 percentage points to 72%. 85% of respondents say they are not concerned about losing their job, tying an all-time survey high.
  • The net share of respondents who say their household income is significantly higher than it was 12 months ago rose 9 percentage points to 15%.

ABOUT FANNIE MAE’S HOME PURCHASE SENTIMENT INDEX

The Home Purchase Sentiment Index (HPSI) distills information about consumers’ home purchase sentiment from Fannie Mae’s National Housing Survey (NHS) into a single number. The HPSI reflects consumers’ current views and forward-looking expectations of housing market conditions and complements existing data sources to inform housing-related analysis and decision making. The HPSI is constructed from answers to six NHS questions that solicit consumers’ evaluations of housing market conditions and address topics that are related to their home purchase decisions. The questions ask consumers whether they think that it is a good or bad time to buy or to sell a house, what direction they expect home prices and mortgage interest rates to move, how concerned they are about losing their jobs, and whether their incomes are higher than they were a year earlier.

(Source: Fannie Mae)

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

 All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

Report Says Housing Affordability Index Up for Q1 2015

(c) CanStockPhoto

(Jeff Sorg, OnlineEd) – First quarter home prices saw a decrease in value of $5,000 to $210,000, while average mortgage interest fell from 4.29 percent to 4.03 percent in the same period. Falling prices and interest rates brought a boost in nationwide affordability in the first quarter of 2015, says the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released May 14, 2015.

“The past two quarters have seen an improvement in affordability as mortgage rates remain low,” said NAHB Chief Economist David Crowe. “Eighty-five percent of the metropolitan areas measured experienced an increase in affordability. Along with favorable home prices and pent-up demand, this broad improvement should help encourage more buyers to enter the marketplace.”

“Consumers benefitted from continued low mortgage rates and some fall in the price of homes sold in the first quarter, as these conditions offer a great time to buy,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo.

Up from the 62.8 percent of homes sold to median-income earners in the fourth quarter, 66.5 percent of new and existing homes sold between the beginning of January and end of March were affordable to families earning the U.S. median income of $65,800.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

  This article was published on May 15, 2015. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.