Published by FOX Business | August 15, 2021
Peoria, Illinois ranked the most affordable housing market.
The demand for homes has continued, driven by low inventory levels and record-low mortgage rates.
According to the National Association of Realtors latest quarterly report, all but one of 183 markets have shown increased median sales prices.
The report also revealed that 94% experienced double-digit price increases, compared to 89% in the first quarter of 2021.
Since last year, the median sales price of single-family existing homes rose almost 23 percent, and all regions saw double-digit year-over-year price growth.
“Home price gains and the accompanying housing wealth accumulation have been spectacular over the past year, but are unlikely to be repeated in 2022,” said Lawrence Yun, NAR chief economist. “There are signs of more supply reaching the market and some tapering of demand,” he continued.
Additionally, with rising home prices, monthly mortgage payments have grown as well.
The monthly mortgage payment on an existing single-family home financed with a 30-year fixed-rate loan and 20% payment rose to $1,215, which is an increase of $196 from a year ago.
Despite the effective 30-year fixed mortgage rate decreasing to 3.05% from 3.29% a year ago, the monthly mortgage payment still grew among all homebuyers. As a share of the median family income, the monthly payment rose to 16.5 percent in the second quarter of 2021. A year ago, it was at 14 percent.
“Housing affordability for first-time buyers is weakening,” Yun said. “Unfortunately, the benefits of historically-low interest rates are overwhelmed by home prices rising too fast, thereby requiring a higher income in order to become a homeowner.”
For first-time home buyers, the mortgage payment on a 10 percent down payment loan rose to 25 percent of income. More than 25 percent of the family’s income would make the mortgage unaffordable.
In 2021, the report showed 14 metro areas where a family needed more than $100,000 to make a 10 percent down mortgage payment, including New York City, Jersey City, Boston and San Francisco.
Despite this, there are a few metro areas where you need $25,000 or less to buy a home, and more specifically, where a family can afford to finance a home with a 10 percent down payment.
Continue reading to learn where the four most affordable housing markets are.
