News

Know about market updates

Home affordability still high – but for how long?

WASHINGTON – Feb. 3, 2016 – Property prices have been on the rise the last few years, but homes are still more affordable now than they were in the pre-bubble years, according to the latest Mortgage Monitor Report released by Black Knight Financial Services.
Households use 21 percent of the national median income to pay a mortgage on a median-priced home. In 2000-2002, the national average payment-to-income ratio was 26 percent; in 2006, it was 33 percent.
However, Black Knight’s report comes with a warning: If home prices continue to increase – as they have for 43 consecutive months year-over-year – the affordability picture in homeownership could start to change in two years. In issuing the warning, Black Knight factored in a continuing 5.5 percent annual home price appreciation as well as interest rate rises of 50 basis points per year.
Under that scenario, “We see that in two years home affordability will be pushing the upper bounds of that pre-bubble average,” says Ben Graboske, senior vice president at Black Knight Data and Analytics. “At the state level under that same scenario, eight states would be less affordable than 2000-2002 levels within 12 months and 22 states would be within 24 months.”
Graboske says that Hawaii and Washington, D.C., in particular, are already less affordable than they were during the pre-bubble era. On the other hand, he says, even after 24 months under this scenario, Michigan – and a few other states – would still be much more affordable by the end of 2017 than in the early 2000s.
Within 12 months, the average mortgage payment is expected to rise by $114, which would then require 24 percent of a household’s monthly income – still below the 2000-2002 levels, according to Black Knight. But by the end of 2017, monthly mortgage payments are expected to be $240 more than today, which would push the tally to 26.5 percent of a household’s income and the upper levels of the pre-bubble averages, the report notes.
Source: Black Knight Financial Services
© Copyright 2016 INFORMATION, INC. Bethesda, MD (301) 215-4688
 
Source: Florida Realtors Feed

Leave a Reply

Your email address will not be published.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