Understanding Today’s Connected Borrower

Sign up for this webinar to learn how to transform the borrower journey from transaction to relationship and gain a significant lift in production in today’s digital lending environment.

The unique challenges facing minority first-time homebuyers

In this episode, we interview Timothy Demry, a real estate agent in San Francisco’s Bay Area, about his experience serving minority first-time homebuyers.

How modernized servicing creates customers for life

Servicers must be powered by nimble technology to be heroes to borrowers, stalwarts to investors, and stewards of consumer protection to regulators.

Savvy lenders are already preparing for the next valley – Here’s how

Despite increased rate of tech adoption, the industry still has room for continued tech development and usage. Read here to learn more about key technologies that lenders need to give more attention to.

Real Estate

Wages aren’t keeping pace with home-price growth, and it’s putting a dent in the housing market

Most U.S. markets out of reach for would-be homebuyers

A good real estate agent might tell you that the general rule of thumb when buying a home is to follow a price-to-income ratio of 2.6, meaning that if you can afford the price of the home on 2.6 years’ worth of household income, it can be considered affordable.

But for homebuyers in most parts of the country, that 2.6 threshold is far out of reach, according to a recent study by Clever Real Estate.

ratioAccording to Clever’s research, price-to-income ratios have shot up since the 1960s, surpassing the 2.6 mark in the ’90s and nestling around 3.6 for the last couple of years. (See the chart from Clever to the left illustrating how the price-to-income ratio has changed over decades.)

This puts real estate in most markets well out of reach for the average earner.

Median home prices have risen in recent years, growing at four times the rate of household incomes since 1960, Clever reveals, adding that while median home prices increased 121% nationwide since that time, median household incomes rose only 29%.

Renters have been hit hard too. Median gross rent has increased 72% since the ’60s, surpassing adjusted incomes two-fold, Clever points out.

“Rising rents and increasing home prices make it harder than ever to save for a down payment and afford monthly mortgage payments,” the report notes.

While great geographic differences exist, there are only 16 markets out of the nation’s 100 most populated cities where the average earner can afford a house below the 2.6 sweet spot.

And, while it’s no surprise that the disparity between incomes and home prices is greatest in the West, it might be news that the Midwest is exceedingly affordable, with almost no gap between rent and income growth, meaning that renters have the opportunity to save for a down payment to afford a median mortgage in the region.

Below is a chart from Clever revealing the most and least affordable cities based on price-to-income ratios:

Latest Articles

Fannie Mae celebrates Single-Family Green MBS milestone

A year after issuing its first Single-Family “Green” MBS on Earth Day 2020, Fannie Mae has now completed 25 transactions for the program, totaling $167 million in bonds backed by mortgages on newly constructed, energy-efficient homes.

Apr 22, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please