Real Estate Insights April 30, 2024

The State of Home Affordability: A Detailed Analysis 🏡💰


In today’s real estate market, the affordability of homes is a topic of significant concern. While it’s true that homes are less affordable now than they were in recent years, they are by no means out of reach for most buyers. To understand the dynamics of home affordability, it’s crucial to consider three key factors: home prices, mortgage rates, and wages.

Home Prices: A Steady Increase

The most recent Home Price Insights report by CoreLogic reveals a substantial 19.1% increase in home values from last January to this January. This surge in prices has undoubtedly contributed to the decline in affordability over the past year.

Mortgage Rates: On the Rise

Current mortgage rates vary across different programs and are subject to change:

  • 30 Year Fixed: 7.125% (APR 7.247%)
  • 15 Year Fixed: 6.500% (APR 6.620%)
  • 30 Year FHA: 6.625% (APR 6.712%)
  • 15 Year FHA: 6.125% (APR 6.363%)
  • VA: 6.875% (APR 7.025%)
  • USDA Rural Development: 6.625% (APR 6.776%)
  • MSHDA (No DPA): 6.000% (APR 6.115%)
  • Jumbo 30 Year Fixed (over $647,200): 7.375% (APR 7.462%)
  • Jumbo 15 Year Fixed (over $647,200): 7.125% (APR 7.349%)

These rates have increased compared to last year, further impacting the affordability of homes.

Wages: A Positive Trend

Despite the challenges posed by rising prices and rates, there is a silver lining in the form of increasing wages. According to ADP, job holder incomes rose by 5.9% last year, with even higher increases of 8.0% for those who switched employers. This rise in wages has helped offset some of the increased costs associated with buying a home.

Conclusion: Affordability Amidst Challenges

While it’s true that homes are less affordable now than they were in the past, they are not unaffordable. Rising wages have played a crucial role in maintaining affordability, balancing out the impact of rising prices and rates. It’s important for buyers to consider all these factors when assessing their ability to purchase a home.

Despite the challenges, opportunities still exist in the market for buyers who are well-informed and prepared. By understanding the dynamics of home affordability and seeking advice from real estate professionals, buyers can navigate the market successfully and find a home that meets their needs and budget. 📈🏠🔑