High Home Prices Softens Enthusiasm Of Homebuyers

Redfin reports, a homebuyer with a $2,500 monthly housing budget can afford a home priced $33,250 higher than this time last year.

July data shows Homebuyer purchasing power increased 6.9%, but with home prices up 8.2% year over year in July, this home-buyer purchasing power is essentially canceled out.

Redfin Chief Economist Daryl Fairweather said in a release, “Low mortgage rates are motivating many people to purchase a home, particularly those who want more space to work from home, 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.”

“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.”

Since the inventory is low fewer there are homes for sale that are affordable for someone with a $2,500 monthly budget. 

This July, only 70.6% of homes nationwide were affordable for a buyer with that budget, down from 71.9% last July.

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

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