Top markets for affordable renovated housing inventory

Despite the rapidly deteriorating affordability, there is some hope for homebuyers in the form of renovated homes: properties that have been rehabbed into move-in ready condition after being purchased at auction.

HousingWire Magazine: December 2021/ January 2022

AS WE ENTER A NEW YEAR, let’s look at some of the events that we can look forward to in 2022. But what about what’s next for the housing industry?

Back to the Future of Mortgage Lending

This webinar will be a discussion on understanding what’s to come in the future of mortgage lending by analyzing past trends in the industry, evolving consumer behaviors and demographics of the industry’s production capacity.

Logan Mohtashami on Omicron and pending home sales

In this episode of HousingWire Daily, Logan Mohtashami discusses how the new COVID variant, Omicron, will impact inflation and whether or not it will send mortgage rates lower.

Real Estate

Only half of Americans can afford an entry-level home

This spells major opportunity for the rental market

Just over half of Americans can afford an entry-level home as affordability issues continue to plague the nation’s housing market, and the situation is creating a robust opportunity for rentals.

Only 54% of Americans can afford a home priced at 20% of the median home price in their area, according to a study of 130 metros by John Burns Real Estate Consulting, which called that benchmark a reasonable proxy for an entry-level home.

But while this figure seems bleak, the report noted that affordability is improving, increasing 3% thanks to a recent drop in mortgage rates.

“The plunge in mortgage rates has created homeownership possibilities for 2.7 million more households as well as move-up possibilities for current homeowners with enough equity,” the analysts wrote. “This will spur home-buying activity this year, possibly averting the decline in volume we have been forecasting.”

The report called out California for its abysmal affordability rate, as only 34% of its residents can afford to purchase a home there. San Francisco and San Jose stood out as the least affordable at only 11% and 18%, respectively.

In contrast, the most affordable market is Allentown, Pennsylvania-New Jersey, where 77% of residents have the means to purchase a home.

The consulting group said that the affordability gap has created sizable opportunity for the rental market, saying that it has given rise to “the hottest new home development craze”: newly built neighborhoods consisting entirely of single-family rental homes.

“The lack of affordability nationwide will keep pushing more demand toward renting, especially in the most expensive markets,” the analysts predicted. “Very few homes exist that were purposely built with renters in mind – an opportunity that many companies are now seizing.”

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