The recent data from the real estate market showed still not good signs for the housing market in general. While the housing market might have cooled off already, the affordability still experiencing crisis, which makes the housing market face housing affordability problems – and these issues are accelerating.
According to Kelsi Maree Borland in her article at Globest, the market is still facing housing affordability issues, and it is accelerating faster than you can imagine. Read the article below to know more.
Housing Affordability Issues Are Accelerating
Home affordability is at its lowest level in 10 years, and with rising mortgage rates, the deterioration of affordability is accelerating.
Home affordability issues are worsening. According to a new report from ATTOM Data Solutions, national home affordability is at its lowest level in 10 years. Home affordability currently ranks 92 on the research firm’s index, with 100 representing a balanced market. This is the second consecutive quarter that home affordability has fallen below 100 on the index. A disconnect between housing price appreciation and income growth has been the primary drive of affordability issues across the country.
“We have seen affordability deteriorating over the last six years because of the disconnect between home price appreciation and wage growth,” Daren Blomquist, SVP at ATTOM Data Solutions, tells GlobeSt.com. “Home price appreciation has consistently outpaced wage growth over the past six years of the housing recovery. To put some numbers on that, we saw that home prices nationwide bottomed out in the first quarter of 2012. Since then, median home prices nationwide are up 76%, and during the same time, average weekly wages are up 17%. So, over the past six years, home prices have grown at a pace that is more than four times as fast as wages.”
This problem is accelerating. While this disconnect has driven housing affordability problems for the last six years, increasing mortgage rates are putting additional pressure on affordability. “This year, we reached a tipping point. Home price affordability deterioration accelerated because of rising mortgage rates,” explains Blomquist. “ See full post here…
This is the lowest level housing affordability experienced in the past 10 years. Capped with the rising mortgage rates, it will just result in an acceleration of housing affordability issues. For some experts, these issues are worsening. Housing affordability is a great metric to look at for the housing market in general.
Another problem for the housing market is stalled mobility. According to Adam Sarhan in his article at Forbes.com, there has been a lack of ability for people to either move up in their housing, downsize or even make a career move. Learn more about this issue below.
Stalled Mobility: Another Problem For The Housing Market
The real-estate market is a very important part of the economy and after a nice recovery there are a few cracks forming on the periphery. The real-estate market has been steadily recovering since late 2011. Back then, a slew of housing stocks and home prices bottomed and began turning higher after the prices collapsed during the 2008 financial crisis. Now, after a big multi-year rally, there seems to be trouble brewing in the U.S. residential and commercial real estate markets.
Commercial Prices Are Falling For The First Time In Years:
For the first time in years, commercial real estate prices are falling which is not a healthy sign for Main Street or Wall Street. Many people look at commercial real estate as a leading indicator because it serves as a proxy for the overall economy. To extrapolate that logic, residential housing prices tend to rally when the economy is strong and businesses are hiring. So the fact that commercial real-estate prices are falling does not bode well for the economy or the residential housing market.
Another disconcerting factor that is plaguing the housing market is a concept known as stalled mobility. Steven Gattuso, CFA, CFP, CMA, Senior Portfolio Manager and Director of Research at Courier Capital, with $1.6 billion under management was the first person to bring this to my attention. Steven defines stalled mobility as, “The lack of ability for people to either move up in their housing, downsize or even make a career move to another city.” Basically, people want to move but there are a few factors that are preventing them from doing so. Click here to read the rest of this post…
If this trend continues, it’s only a matter of time until we see the housing market collapses, bringing down the U.S economy in the process. This is due to the fact that for the first time in years, commercial real estate prices are falling hard. A big sign of concern since commercial real estate is a leading indicator for some experts.
For Robert Dietz in his article in Housing Wire, the housing market, in general, has a growing affordability problem that requires immediate solution. There is a reason for housing affordability problems. Read below to know these reasons.
[Pulse] The Housing Market has a Growing Affordability Problem, and Here’s Why
Should Fannie and Freddie step in?
Since 2012, housing affordability conditions for prospective homeowners have declined.
The National Association of Home Builders/Wells Fargo Housing Opportunity Index revealed that 77.5% of new and existing home sales were affordable under standard underwriting criteria for a typical family in early 2012.
This places current affordability conditions at a 10-year low. And the problem appears to be getting worse.
Due to lack of resale inventory and insufficient construction of new housing, housing growth outpaced income growth in recent years.
Combined with a rise in mortgage interest rates, these price gains reduced housing affordability such that by the end of 2018, only 56.6% of new and existing home sales were affordable for a typical family.
The causes of this situation are complex.
On the new construction side, a persistent labor shortage, building material price volatility and tariffs, and growing regulatory burdens on issues like zoning and building codes have held back housing production in areas with growing population and employment.
Financing issues also are holding back the housing market.
While we typically think of mortgage access issues for buyers as the financing issue of focus within the housing sector, a lack of available financing for acquisition, development and construction (AD&C) debt also is an important factor restraining construction and increasing costs. Learn more here…
The above articles clearly show that housing affordable and the housing market, in general, is still having issues and continue to go on a downslide over the past months or years, and there are several factors as to why it is still happening despite a strong US economy and the real estate market is cooling off. More and more investors, sellers and home buyers are moving off the market until there is certainty in the market.
While it is true that housing affordability is in the low side, only a few would know that this is actually the right time to sell your house since the competition is very light and some home buyers and investors would pay your price. If you want to sell your house fast, we at Dependable Homebuyers can help you find the right buyer for your house in a not so strong real estate market. To learn more, visit https://www.dependablehomebuyers.com and let’s get started.
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