National Market Update #5 - But Can you Really Afford It?

If you have been following the real estate market recently, you are well aware of the shifting market.  For months, even years, the market has tilted more favorably to the seller with high home prices, lack of inventory and multiple offer scenarios.  But as we wind down 2022, what are we seeing in Q4.  What key factors are affecting home affordability in today’s market? Hi, I am Krista Mashore with Homes By Krista and ExP Realty. Today, there are three factors used to gauge home affordability: Home price, current mortgage rates and wages.  So, let’s take a look at all three to see what challenges buyers might be facing in today’s market. The fluctuation in mortgage rates are what buyers seem to be most focused on today in their search.  How are rising interest rates going to determine what I can afford as a buyer?  This year rates are almost four percentage points higher than at the beginning of Q1. According to Len Kiefer, Deputy Chief Economist at Freddie Mac “The 30 year fixed mortgage rate has increased 3.83 percentage points since the end of last year.  That’s the biggest year to date increase in rates in over 50 years.” Because of these rate hikes, it is impacting how much it costs to finance a home and that may be pricing buyers out of the market on what they can afford. Also it is important to look at current home prices when looking at buyer affordability.  Although home prices have come down in recent months, they are still much higher than they were “pre pandemic”.  Combine the higher than usual home prices and mortgage rates, can make affordability a challenge for some buyers. And, then there is wages.  The good news: wages have grown over time, so more buyers are taking home more money in their pockets.  This will help balance out the affordability with the higher mortgage rates and home prices and keep the serious buyers still buying homes.Buying a home involves so many variables, so it is always best to have a trusted real estate agent with enough experience and knowledge to navigate you from start to finish in the process. Feel free to reach out to me and my team so we can help you make the most informative decisions on affordability with your home search.