As we start the new year there has been much speculation of what is in store for the real estate market this year. During the last quarter of 2018 there was much talk of a shift in the market with price increases slowing down, more properties coming available on the market and fewer buyers retreating to the sidelines. However, this doesn’t mean that buyers have been finding it any easier just yet.
According to a recent report released by ATTOM Data Solutions, home affordability has reached its lowest level in 10 years during the 4th quarter of 2018. The data firm had examined affordability of homes in 469 counties and studied the percentage of income that would be needed to buy a median priced home.
“Home affordability is getting worse nationwide,” says Daren Blomquist, senior vice president at ATTOM. But buyers shouldn’t lose hope. “We’re going to hit an affordability tipping point in 2019, where it becomes more affordable to buy. Buyers will have more inventory to choose from and they will be running against fewer multiple-offer situations.”
Areas Where Affordability is Getting More Difficult
Buying a home during the fourth quarter of 2018 became more challenging in 42% of the counties that were researched in this report as compared to the 3rd quarter. These areas included some coastal communities in California as well as the Phoenix and Las Vegas areas.
“The coastal California markets are still highly unaffordable … because there is still a limited supply of homes and a lot of demand,” Blomquist says. So they’re less likely to be affected by a broader housing slowdown. “Those types of markets are going to operate a little bit outside of reality.”
Areas Where Affordability is Getting Easier
Although it was becoming more difficult to buy a home in many areas, there were some regions that showed things were becoming more favorable. These counties include areas around cities including Chicago, IL, Houston, TX, San Diego and Los Angeles CA and Miami FL.
“The rate of home price appreciation is slowing down in these markets. It’s slowed down enough where it’s actually on par with wage growth,” says Blomquist. “It means for buyers there’s hope to get into homeownership.”
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