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New home buyers facing least affordable market ever, data from the MBA shows
Posted on 6/9/23 at 9:49 am
Posted on 6/9/23 at 9:49 am
quote:
According to data provided by the Mortgage Bankers Association, Americans who are searching for a new place to live are encountering the most unaffordable housing market ever witnessed.
The Purchase Applications Payment Index (PAPI) of the association rose by 0.5% in April, reaching an all-time high of 172.3. This index serves as an indicator of declining affordability for borrowers, which can be attributed to various factors such as increasing loan amounts, rising mortgage rates, or a decrease in earnings.
Edward Seiler, the associate vice president for housing economics at MBA, explained that this record was set because mortgage rates, which have remained in the high 6s, have not retreated, and the typical loan application amount has surged at a faster pace than incomes have grown.
In April, the national median mortgage payment stood at $2,112, an increase from the previous month's $2,093, as reported by MBA.
The PAPI readings were particularly high in states such as Idaho (255.6), Nevada (246.3), Arizona (226.1), Florida (216.6), and California (213.9).
Since the Federal Reserve initiated a series of interest rate hikes in 2022, the mortgage rates for 30-year fixed loans have more than doubled, soaring from 3% to over 7%.
Currently, with the Federal Reserve having implemented 10 consecutive rate hikes and the upcoming June meeting looming, mortgage rates are hovering just below 7%.
Seiler expressed that this situation presents the most challenging circumstances for new home buyers since the end of the Great Recession. While current homeowners who were fortunate enough to secure a 2.75% interest rate in 2022 find themselves in an advantageous position, those seeking to purchase their first home or move to a different property face a highly daunting prospect.
LINK
Posted on 6/9/23 at 9:53 am to stout
This is the WEF/Deep State plan. You will own nothing & like it.
Posted on 6/9/23 at 9:53 am to stout
People need to pick up their boot straps and quit complaining
Posted on 6/9/23 at 9:54 am to stout
quote:
New home buyers facing least affordable market ever, data from the MBA shows
Posted on 6/9/23 at 9:55 am to Hetfield
Well Baby Boomers may be contributing to the unaffordability problem as well
Baby Boomers Surpass Millennials as Largest Share of Current Homebuyers
Baby Boomers Surpass Millennials as Largest Share of Current Homebuyers
quote:
Bank of America (BofA) Institute released a new analysis revealing that net flows of domestic migration—people moving within the United States—continue to follow pandemic trends. BofA internal data, which leads the Census Bureau population data by almost a year, found that as of Q1 2023, cities that saw a large influx of people during the pandemic are still growing faster than other cities in recent quarters, but housing prices are weakening even in cities with growing populations.
Among the major metropolitan statistical areas (MSAs), Austin saw the largest net inflow of population both during 2020-2021 with +5% and over the past four quarters with +1.5%. Also high on the list are Tampa and Orlando, both with a net increase of +0.8% between Q1 2022 and Q1 2023. While Phoenix and Las Vegas saw strong increases in population during the first two years of the pandemic, the pace of growth has slowed noticeably in recent quarters, up just 0.3% and 0.2% year-over-year (YoY) in Q1 2023.
Large population inflows usually increase both home and rental prices. However, home prices are slowing rapidly, according to data from Freddie Mac, even in cities with growing populations, including Austin. In 2020 and 2021, when both housing inventory and mortgage rates were low, cities with the most inward migration such as Austin and Tampa also witnessed the biggest increase in home prices. However, as Fed rate hikes pushed up borrowing costs for these homes, demand dampened despite continued population growth in these popular cities, which has led to a correction in home price appreciation.
Cities such as San Jose, San Francisco, and New York saw the biggest outflow of people during the early years of the pandemic, and the rate of decline in 2023 continues to be the highest among major MSAs.
In contrast, rental prices remain strong in cities with positive inflow of residents. In April 2023, median rent payments for BofA customers in Austin, Orlando, and Tampa were up 11%, 14%, and 14% YoY. This compares to the national average of 8% and just 3% for San Francisco.
In addition to the fact that population increases lead to higher demand for rental units, low affordability in the home purchasing market has likely also pushed some prospective homebuyers into the rental market, leading to even more upward pressure on rent levels.
The latest Home Buyers and Sellers Generational Trends report from the National Association of Realtors found that, for the first time since 2014, baby boomers overtook millennials as the generation with the biggest share of homebuyers. From July 2021 to July 2022, 39% of surveyed homebuyers were baby boomers, followed by 28% of millennials and 24% of Gen X.
The rise of baby boomers as the primary homebuyers can be attributed to three main reasons. First, as this generation retires, they move closer to family and friends. Second, demand for smaller homes increases as their children move out. Boomers hold the greatest wealth across generations at $73 trillion in Q4 2022—eight times that of millennials. In the current environment of high home prices and interest rates, boomers are better equipped financially for home purchasing. In fact, data shows only 49% of older Boomers (aged 68-76 years) financed their home purchase in 2022, compared with 93% of those aged 33-42 years, according to the report.
Posted on 6/9/23 at 9:55 am to stout
Craziest thing is least affordable doesn't mean overvalued. Prices will still come down a bit, but anyone expecting a full crash will be sadly disappointed.
Posted on 6/9/23 at 9:56 am to stout
We're looking to buy and I've got heart palpitations over this market right now. I have no idea what we're going to do
Posted on 6/9/23 at 9:57 am to geauxtigers87
quote:
We're looking to buy and I've got heart palpitations over this market right now. I have no idea what we're going to do
We got nervous too, but at the end of the day we aren't looking at our house as an investment, we bought within our means, and plan on being there for at least 10 years.
Posted on 6/9/23 at 10:00 am to stout
They're just LAZY! Why don't they just open a CD with a 15% interest rate like everyone else did?
Posted on 6/9/23 at 10:00 am to NIH
quote:
People need to pick up their boot straps and quit complaining
Cut out the Starbucks and you can afford a house right? Eat bread and water for a year and tough it out? Bus to work? Work 2-3 jobs?
Posted on 6/9/23 at 10:02 am to NIH
quote:
People need to pick up their boot straps and quit complaining
I mean there are things people can control, and things they can’t.
Posted on 6/9/23 at 10:10 am to stout
I bought my first house for $162k in 2008. A near exact replica in the same subdivision is now listed for $400k. It's absolutely bonkers.
This post was edited on 6/9/23 at 10:12 am
Posted on 6/9/23 at 10:12 am to stout
If these lazy arse kids weren't spending all their money on TikTok's, they'd be able to afford to buy a house!
I did!
I did!
Posted on 6/9/23 at 10:16 am to jnethe1
quote:
I mean there are things people can control, and things they can’t.
Liberal scum say things like this
Posted on 6/9/23 at 10:37 am to lowspark12
quote:
Liberal scum say things like this
This isn't political when it comes to this housing market currently. A combination of high interest rates, low inventory, crushing inflation, and insane rental prices are making homeownership impossible for many people on both aisles. You can't just rent and save money like in the past. Rental properties are going for far more than mortgages right now.
Posted on 6/9/23 at 10:39 am to Hetfield
quote:
This is the WEF/Deep State plan. You will own nothing & like it.
It’s a very public strategy actually by companies like BlackRock. It’s not a secret.
Posted on 6/9/23 at 10:41 am to geauxtigers87
quote:
We're looking to buy and I've got heart palpitations over this market right now. I have no idea what we're going to do
We’ve decided to live between my camp and camper for a year waiting on the builder to get freed up. Maybe rates and materials will go down a bit.
Posted on 6/9/23 at 10:44 am to shutterspeed
that was the situation i was in - it was either renew our apartment lease for a little over 1800 a month, or pay an additional 500 for a house.
the cost of rent was just stupid.
the cost of rent was just stupid.
Posted on 6/9/23 at 10:56 am to stout
Who is buying all these houses? It makes zero sense. Even if you are buying to rent, who can afford the rent to cover the costs?
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