A look at Biden’s first week in office

This episode reviews last week’s inauguration of President Joe Biden, examining which housing issues the new administration has already taken action on.

Mortgage Tech Demo Day

Tune in to our live Virtual Demo Day on February 2nd to experience demos from the most innovative loan origination and valuation tech companies in the industry.

If consumers aren’t holding lenders back, then who or what is?

The challenge for lenders and investors is understanding how to meet borrowers where they are without layering on risk or getting bogged down in third-party intermediation.

HomeBridge’s Brian White on diversity at a practical level

HomeBridge's Brian “Woody” White discusses ways to increase diversity within the housing finance industry.

Real Estate

High home prices erase homebuyers’ increased purchasing power

Low housing inventory is to blame

Homebuyer purchasing power increased 6.9% this July, meaning a homebuyer with a $2,500 monthly housing budget can afford a home priced $33,250 higher than a year ago, Redfin found, which it credited to historically low mortgage rates.

But with home prices up 8.2% year over year in July, this homebuyer purchasing power is essentially canceled out, data from Redfin shows.

“Low mortgage rates are motivating many people to purchase a home, particularly those who want more space to work from home,” Redfin Chief Economist Daryl Fairweather said in a release. “But because there hasn’t been an increase in the number of homes for sale since rates started dropping with the onset of the pandemic, many buyers end up competing for the same homes, driving up prices.”

For example: at a 3% mortgage rate, a homebuyer can afford a $516,500 home with a budget of $2,500 a month, up from a $483,250 home last year on the same budget. Essentially, the monthly payment on a $483,250 home has dropped from $2,500 a year ago to $2,339 today, Redfin said.

But because of low housing inventory, there are fewer homes for sale that are affordable for someone with a $2,500 monthly budget compared to last year. This July, only 70.6% of homes nationwide were affordable for a buyer with that budget, down from 71.9% last July.

“Those competing forces make the current market a wash for many buyers looking for single-family homes in competitive areas,” Fairweather said. “Buyers searching for condos can find a better deal, both on overall price and mortgage payments, because most condos are less competitive than single-family homes as people move out of densely populated urban areas.”

In Salt Lake City, the share of affordable homes went down 5.2 percentage points; followed by Kansas City, Missouri, down 3.7 percentage points; Austin, Texas, down 3.2 percentage points; and Boston, down 3 percentage points.

However, in Miami, the share of affordable homes for sale went up 2.1 percentage points while in Jacksonville, Florida; Columbus, Ohio; and Milwaukee, the share of affordable homes went up 2 percentage points.

This week, mortgage rates ticked up 2 basis points to 2.93%.

Leave a comment

Most Popular Articles

Zillow: Expect another record year for home sales

Zillow predicts 6.82 million existing home sales in 2021, the most recorded in a single calendar year since 2005 and a 21.1% increase from 2020.

Jan 25, 2021 By

Latest Articles

The Fed plots a slow, stable path on mortgage rates

The FOMC left future economic policies virtually unchanged at its Wednesday meeting, indicating plans that short-term mortgage rates will stay low for years to come.

Jan 27, 2021 By
3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please