What to expect at HousingWire’s Spring Summit

The focus of the Summit is The Year-Round Purchase Market. Record low rates led to a banner year for mortgage lenders in 2020, and this year is expected to be just as incredible.

Conquering the Mortgage Lender’s Dilemmas

This webinar provides a roadmap for creating a sophisticated, digital-first cost improvement strategy to maximize profits by reducing high processing environments.

HW's 2021 Spring Summit

We’ve gathered four of the top housing economists to speak at our virtual summit, a new event designed for HW+ members that’s focused on The Year-Round Purchase Market.

We need higher mortgage rates to cool the housing market

2020-2024 will have the best housing market demographics and the lowest mortgage rates ever recorded, which could accelerate real home prices too quickly.

Mortgage

It’s officially unaffordable to rent in almost all major cities

Zillow study outlines renting's deep impact on buying

According to the latest real estate market report from Zillow, homes remain more affordable to buy in 94 of the country’s 100 largest metros compared to historic averages. On the other hand, renting is more expensive than ever in 88 of the country’s 100 largest markets.

“The affordability of for-sale homes remains strong, which is encouraging for those buyers that can save for a down payment and capitalize on low mortgage interest rates. But the health of the for-sale market is directly tied to the rental market, where affordability is really suffering” said Zillow Chief Economist Stan Humphries.

This report confirms the concerns of Shaun Donovan, former Secretary of the U.S. Department of Housing and Urban Development, in March.

Since rents didn't experience the massive drop that home values witnessed during the recession, rent prices just keep climbing. Meanwhile, home values jumped 6.5% year-over-year, while national rents increased 2.8% for the same time span.  

And now due to low mortgages rates and housing affordability, homeowners at the end of the second quarter only have to expect to pay 15.3% of their income to a mortgage, significantly below the pre-bubble days of 22.1%.

“As rents keep rising, along with interest rates and home values, saving for a down payment and attaining homeownership becomes that much more difficult for millions of current renters, particularly millennial renters already saddled with uncertain job prospects and enormous student debt,” Humphries said.

“In order to combat this phenomenon, wages need to grow more quickly than they are, particularly for renters, and growth in home values will need to slow,” he continued.

The benefits of homeownership may not outweigh renting forever. Zillow noted that mortgage rates are expected to rise in the coming year.

“When mortgage rates hit 5%, still very low by historical standards, the number of unaffordable metros for homeowners among the top 100 will more than double, to 13,” the report said. When rates hit 6%, the number of unaffordable metros will almost double again, to 24.

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