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A Redfin analysis showed that the average homebuyer lost $71,000 in purchasing power over the past year.
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This is due to higher mortgage rates, with the average 30-year fixed interest rate close to 7.5% over the past week.
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This mortgage rate was only 5.5% in August last year, but house prices have not budged as prices continue to rise.
The average home buyer lost about $71,000 in purchasing power over the past year, according to a new report Redfin analysis
This was due in large part to rising mortgage rates, which created a recession Housing affordability crisis By raising the cost of borrowing for potential homebuyers.
Mortgage rates are at their highest level in 23 years Over the past week, with the average 30-year fixed interest rate at 7.48% according to Mortgage News Daily. At that rate, a homebuyer with a budget of $3,000 per month in mortgage payments could afford to buy a home worth $429,000, Redvine estimates, which is about the same as the median home price in the United States of $422,137.
But that’s about $71,000 less than what these buyers could have afforded in August last year, according to the real estate listings site. At the time, a budget of $3,000 per month was enough to fund a $500,000 home, given that the average thirty-year fixed interest rate hovered around 5.5%.
Housing affordability conditions have deteriorated over the past year thanks to rising interest rates in the economy, which has affected mortgage rates to remain close to their highest levels in two decades. This has increased the cost of borrowing for homebuyers, marginalizing many outside the existing housing market.
Higher rates also indirectly led to higher housing pricesMany existing homeowners are looking to hold on to their properties that have been financed at low rates for years. This created an imbalance between supply and demand, which drove up sales prices.
House prices are now about 40% higher. than it was before the pandemic, according to a previous Redfin analysis, and the median home sale price is only 2% away from All-time record-breaking retest I arrived last summer. Meanwhile, existing home sales fell about 19%. than the previous year, according to Fannie Mae data.
But affordability problems are likely not going away anytime soon, as mortgage rates are expected to remain high for the next few years. Prices will need to call back to 5% Scope to unlock more inventory Industry experts say the 30-year fixed interest rate is largely expected to put downward pressure on home prices. 6% by the end of this year.
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