Housing Affordability To Improve In These Metros With Lower Mortgage Rates
As mortgage rates remain near highs last seen at the turn of the century, many potential homebuyers are left wondering when relief might come.
A joint report issued by Realtor.com and the National Association of Realtors (NAR) suggests that certain metropolitan areas could see significant improvements in affordability if mortgage rates were to decrease. Particularly, a reduction in mortgage rates would benefit five key metros, making homeownership more attainable for many families.
In metros like Spokane, Washington, and Lakeland-Winter Haven, Florida, lower mortgage rates would unlock a substantially higher share of homes for middle-income buyers. According to Realtor.com, a rate drop to 6% from the current 7.18% could increase the proportion of affordable listings for local median earners by more than 10%.
The potential shift would mean a considerable boost in housing accessibility, offering a reprieve to markets where high costs have kept many buyers sidelined.
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The report highlighted that in the Spokane metro area, the local affordability score would experience an 11.4% increase if mortgage rates dropped to 6%, making homeownership accessible to a broader range of buyers. Similarly, the Lakeland-Winter Haven area in Florida would see an 11% boost in affordability.
Other metros including Salt Lake City, Utah, Deltona-Daytona Beach, Florida, and Fresno, California also stand to benefit from lower rates, each showing potential increases in affordability above 10%.
A potential shift in affordability is crucial as the housing market grapples with high costs and limited inventory. The median U.S. home-sale price reached a record $386,951, according to Redfin, with the median monthly mortgage payment sitting just below the all-time high at $2,858. Those elevated costs have deterred many potential buyers, leading to a slowdown in pending home sales and flat new listings during a spring period that typically sees an increase in activity.
However, Recent Trends Offer Some Hope
The average daily mortgage rates have been steadily declining since early May, partly due to softer-than-expected inflation data. The decline pushed rates below 7% for the first time in more than five weeks, providing marginal relief for prospective homebuyers.
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Additionally, an increase in price drops among sellers indicates that price growth may be losing momentum, further aiding affordability.
Despite the high prices and interest rates, there are strategic opportunities for buyers in the market. With sellers more open to negotiations and potential price reductions, buyers can leverage the current conditions to find deals, particularly on properties that may need some renovation.
The upcoming Federal Reserve meeting in June will be critical in determining the future trajectory of mortgage rates and housing affordability. If the Fed signals progress in controlling inflation, it could pave the way for rate cuts later this year.
Such a move would reduce borrowing costs for homebuyers and potentially stimulate the housing market by increasing the supply of affordable homes.
As the market awaits developments, the findings from Realtor.com provide a clear indication of where homebuyers could see the most benefits from lower mortgage rates. For those looking to enter the housing market, keeping an eye on those key metros could prove advantageous as the economic landscape evolves.
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This article Housing Affordability To Improve In These Metros With Lower Mortgage Rates originally appeared on Benzinga.com
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