Low inventory might be stifling home sales but they are also fueling home prices—we already know that. How much are they fueling home prices? Thirty percent of metros saw double digit home price increases in the first quarter of 2018 from a year prior, and 91 percent of housing markets measured saw an increase in general.
Home prices continue to increase and mortgage rates might be higher than they are a year ago, leading some reporters to argue homebuyers are finding it more difficult to afford a home. However, affordability isn’t down. In fact, strong wage growth during the first quarter of 2018 “more than offset an increase in mortgage interest rates.” Almost 62 percent of new and existing homes sold in the first quarter of this year were affordable to families earning $71.9K, the US median income. For the Youngstown-Warren-Boardman, Ohio-Pa. almost 91 percent were affordable to homebuyers earning $60K, the median income for the area. At the other end of the spectrum, San Francisco was the least affordable major market, with hardly 9 percent of homes sold considered affordable to families earning $119.6K, the area’s median income.
Millennials are the most likely generation to delay buying a home. The good news, with expectations of housing starts to lend some relief in the future coupled with millennials maturing more into their career and becoming more financially successful, we should see more millennials able to enter the market. It helps the average downpayment for a first-time homebuyer is 5 percent and 43 percent of homebuyers took six months or less to save for their downpayment.