Housing Affordability Is At An All-Time Low | What You Need To Know

Housing affordability is at an all-time low now since 1990 according to the national association of realtors study. This is incredibly troubling news for homebuyers currently shopping for a home since just as recently as the beginning of 2022 relatively cheap mortgage rates were still attainable.

However, after multiple interest rate hikes by the central bank to combat runaway inflation those historically low-interest rates are now a thing of the past.

Housing Affordability

Above is The National Association Of Realtors’ housing affordability index. As you can see the red bar represents where we are today and compares housing affordability back to 1990.

The dotted line represents the threshold of 100 where anything above signals affordability for middle-income earners.

The blue bars represent the financial crisis aftermath and the spike in affordability due to the flood of distressed properties dominating the housing market.

To further illustrate let’s look at how high and fast monthly mortgage payments have risen.

How Much Have Interest Rates Impacted Mortgage Payments?

In the above graph monthly mortgage payments started from affordable in 2020 at around $1020 per month. Later in 2021 mortgage rates spiked to $1265 and began a dramatic climb in February of 2022 as the central bank began hiking interest rates.

How long will this last? No one is for sure, but it will likely keep going until the Fed sees clear evidence that inflation in key sectors of the economy is under control.

So, what’s next? You might be asking. Is home price appreciation over?

Housing Appreciation Forecast For the Rest Of 2022

Surprisingly enough even with the unaffordability of monthly mortgage payments, home prices are predicted to experience strong growth to finish 2022. These numbers were updated from the beginning of the year when they were much lower. Currently, the average appreciation rate across the U.S. is 11.3%.

San Antonio Housing Market Appreciation Rate August 2022

Locally here in San Antonio home price appreciation is still elevated. Last year in August we experienced a 14.6% appreciation on average. And then again this year in August another 14% appreciation. And this really can come as no surprise as we continue to be a destination city where home buyers are fleeing to.

Bottom Line

If you are a home buyer with an excellent rental price and a long-term contract not set to expire anytime soon would be well advised to stay put. Those with expiring leases set to renew should weigh their options carefully but can take a little comfort in knowing they will have more buying options in today’s market as homes last much longer and terms of the sale have improved.

If you were planning to sell and are unsure if you missed your golden opportunity to sell, you should know we are still solidly in a sellers’ market. No, you likely will not see an offer with zero contingencies attached and a sale that happens in 5 minutes at max value, but if the home is priced according to condition, you will still attract an excellent price with fair terms.

If you’re thinking about making a move let’s connect and get you on your way!

Krishna Perkins

Broker/Owner