Housing Affordability

Would be home buyers in our local area are facing serious affordability issues.  The cause  “interest rates" that are now hovering around 7.5%. As the Fed has been raising the overnight lending rates, (and will likely continue to do so), lenders have had to reprice mortgages loans. Making home ownership for many out of reach.​

The effects of this are many. Higher interest rates cause a buyer’s PITI ( principal, interest, taxes, insurance) to rise. PITI is up 5.1% year over year. Currently, more than 50% of household income is going towards PITI. The median income for the Austin-Rock Rock MSA is $122,300, meaning that home buyers at this level could generally afford a home priced between $300,000 - $400,00. Often difficult to find.

Many sellers have had to reduce list prices to move their property. Of properties still active on the market more than 50% have had to decrease list prices. Properties are staying on the market longer adding to housing inventory levels. Many properties that are not selling have undergone multiple price decreases.  Those buyers able to qualify for a loan and afford the payments, will have more choices and negotiating power. However, for many prospective buyers purchasing a home in this environment is just not feasible.

The result of all this is that pending home sales (those going under contract) are down. Home sales are down 26.7% year over year. Those that have sold have had lower prices bringing the median sold price down 3.3% last month and 16.36% from the market peak.

Check out affordability where you are, or want to move to. For more market information go to my Insights page.