Home prices continue on an upward trend, according to the National Association of REALTORS® (NAR) latest quarterly report. Every metro area tracked by NAR saw home price increases YoY for the third quarter. In fact, 65 percent of metros saw double-digit price growth since last year—compared to only 15 metro areas that saw this kind of growth in the second quarter.
The following metros saw the biggest price increases: Bridgeport, Conn. (27.3 percent); Crestview, Fla. (27.1 percent); Pittsfield, Mass. (26.9 percent); Kingston, N.Y. (21.5 percent); Atlantic City, N.J. (21.5 percent); Boise, Ida. (20.6 percent); Wilmington, N.C. (20.6 percent); Barnstable, Mass. (19.4 percent); Memphis, Tenn. (19.1 percent); and Youngstown, Ohio (19.1 percent).
“Favorable mortgage rates will continue to bring fresh buyers to the market,” said Lawrence Yun, NAR chief economist. “However, the affordability situation will not improve even with low interest rates because housing prices are increasing much too fast. In light of the pandemic, prices jumped in a number of metros that contain larger properties and open space—where families could find extra rooms, including areas for an at-home office,”
Overall, the U.S. median home price for existing single-family homes increased 12 percent YoY to $313,500. Regionally, here’s the breakdown on growth:
– West: +13.7 percent
– Northeast: +13.3 percent
– South: +11.4 percent
– Midwest: +11.1 percent
These price increases will take a toll on housing affordability as monthly mortgage payments will grow as well. On a typical existing single-family home, said NAR, the monthly mortgage payment rose to $1,059 in the third quarter (with a 30-year fixed-rate mortgage and a 20 percent down payment). That means that families will need to make about $50,819 annually in order to comfortably afford a home in this scenario—that’s up from the $48,912 needed in the second quarter and the $49,536 needed at the same time last year.
But, again, it all depends on location. According to the report, in 125 of the 181 metro areas, a family needs less than $50,000 annually to afford a typical home. In eight metro areas, however, homeownership is much more difficult to afford—buyers would need more than $100,000 annually in order to purchase homes in the following areas:
– San-Jose-Sunnyvale, Calif. – $228,862
– San Francisco, Calif. – $183,907
– Anaheim, Calif. – $148,760
– Urban Honolulu, Hawaii – $141,600
– San Diego, Calif. – $119,172
– Los Angeles, Calif. – $115,886
– Boulder; Colo. – $110,083
– Seattle, Wash. – $100,977
“As home prices increase both too quickly and too significantly, first-time buyers will increasingly face difficulty in coming up with a down payment,” said Yun. “Transforming raw land into developable lots and new supply are clearly needed to help tame the home price growth.”
For more information, please visit www.nar.realtor.
Liz Dominguez is RISMedia’s senior online editor. Email her your real estate news ideas to ldominguez@rismedia.com.
