As experts in Personal Finance, we at Extreme Investor Network understand the challenges many buyers face in the U.S. when it comes to housing affordability. However, there is some good news on the horizon as conditions are starting to improve, thanks to lower mortgage rates.
According to a new report by Redfin, buyers now need to earn $115,000 to afford the typical home in the U.S. This is a 1% decrease from a year ago, marking the first decline since 2020. Additionally, housing payments have seen the biggest decline in four years, with the median mortgage payment dropping to $2,534 during the four weeks ending Sept. 15, down 2.7% from the previous year.
These declines can be attributed to the lower mortgage rates that have been observed. As of Sept. 19, the average 30-year fixed rate mortgage is at 6.09%, down from 6.20% the previous week. Rates peaked this year at 7.22% on May 2, emphasizing the impact lower rates can have on housing affordability.
While the typical household still earns 27% less than what they need to afford a home, about $84,000 a year, and home prices continue to rise, there are some positive trends to note in the market. Lower mortgage rates, more inventory, and decreased buyer competition are some of the factors contributing to a slightly improved landscape for buyers.
Looking ahead, buyers can expect mortgage rates to be influenced by the economy, as observed by Orphe Divounguy, a senior economist at Zillow. While the Federal Reserve’s interest rate cuts may impact mortgage rates, other economic factors such as Treasury yields will also play a role in determining future rates.
Additionally, an increase in the inventory of homes for sale is making the housing market more favorable for buyers. With 1,350,000 homes for sale at the end of August, up 0.7% from the previous month and 22.7% from August 2023, buyers have more options to choose from.
As the market continues to evolve, it’s essential for buyers to stay informed and be prepared for potential changes. Waiting for the perfect time to buy a home may not always be the best strategy, as the market dynamics can shift quickly. Ultimately, working with a knowledgeable real estate agent and staying informed about mortgage rates and inventory levels can help buyers make the best decisions for their financial future.
At Extreme Investor Network, we are dedicated to providing valuable insights and resources to help our readers make informed decisions about their personal finances. Stay tuned for more updates and tips on navigating the ever-changing landscape of personal finance and real estate investing.