Welcome!




Expand Your Education with These Courses from
A Consumer Advocate Approach to Real Estate: Course 1.
Becoming a Successful Sales Professional: Skills for Sales Success: Part One.
Negotiating Skills: Skills for Sales Success: Part Six.
Customer Relationship Building: Skills for Sales Success: Part Seven.
BPOs: The Agent's Role in the Valuation Process.

Only a Dozen Large Metro Housing Markets Feature Affordable Housing

Interested in more details on this topic? Click here!

metro_housing_marketOf the nation’s 100 largest metro areas, only a dozen are currently more affordable than they historically have been for both renters and homeowners, as widespread growth in housing costs continues to outpace wage growth. Nationally, U.S. home values rose 6.5 percent year-over-year in July, according to the July Zillow® Real Estate Market Reports, while national rents rose 2.8 percent over the same period.

Rental affordability is currently much worse than mortgage affordability, largely because rents didn’t experience the huge drop seen in home values during the recession, and instead have just kept climbing upward. Nationally, renters signing a lease at the end of the second quarter paid 29.5 percent of their income to rent, compared to 24.9 percent in the pre-bubble period. In 88 of the nation’s largest metro areas, renters should currently expect to pay a larger share of their income toward rent than they would have historically.

Thanks mostly to low mortgage interest rates, affordability of for-sale homes looks much better. U.S. home buyers at the end of the second quarter could expect to pay 15.3 percent of their incomes to a mortgage on the typical home, far less than the 22.1 percent share homeowners devoted to mortgages in the pre-bubble days. As of June, home buyers in just six of the country’s 100 largest metro markets analyzed by Zillow were paying a larger portion of their incomes today than historically in order to buy their area’s median-priced home.

But mortgage rates are expected to rise in the coming year. When mortgage rates hit 5 percent, still very low by historical standards, the number of unaffordable metros for homeowners among the top 100 will more than double, to 13. At 6 percent mortgage interest rates, the number of unaffordable metros will almost double again, to 24.

“The affordability of for-sale homes remains strong, which is encouraging for those buyers that can save for a down payment and capitalize on low mortgage interest rates. But the health of the for-sale market is directly tied to the rental market, where affordability is really suffering” said Zillow Chief Economist Dr. Stan Humphries. “As rents keep rising, along with interest rates and home values, saving for a down payment and attaining homeownership becomes that much more difficult for millions of current renters, particularly millennial renters already saddled with uncertain job prospects and enormous student debt. In order to combat this phenomenon, wages need to grow more quickly than they are, particularly for renters, and growth in home values will need to slow.”

The median annual income nationwide was $53,216 as of the end of the second quarter. But according to the Census Bureau, homeowners and renters make drastically different salaries – homeowners make $65,514 per year, while the typical renter in the U.S. makes just $31,888.

In July, median U.S. home values rose 0.2 percent from June, to a Zillow Home Value Index[ of $174,800, the slowest monthly pace of appreciation since February 2012. Looking ahead, for the 12-month period from July 2014 to July 2015, national home values are expected to rise another 2.7 percent to approximately $179,489, according to the Zillow Home Value Forecast.

Median U.S. rents rose 0.6 percent in July from June, to a Zillow Rent Index of $1,318. The monthly spike in rents follows three straight months of flat or falling rents.

For more information, visit www.zillow.com

Want instant access to great articles like this for your blog or newsletter? Check out our 30-day FREE trial of REsource Licensed Real Estate Content Solutions. Need easy stay-in-touch e-Marketing solutions too? Try Pop-a-Note for 99 cents!
Join RISMedia on Twitter and Facebook to connect with us and share your thoughts on this and other topics.




Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Copyright© 2014 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.

Content on this website is copyrighted and may not be redistributed without express written permission from RISMedia. Access to RISMedia archives and thousands of articles like this, as well as consumer real estate videos, are available through RISMedia's REsource Licensed Content Solutions. Offering the industry’s most comprehensive and affordable content packages. Click here to learn more! http://resource.rismedia.com

Our Latest News >>