Prospective
home
buyers
leave
a
property
for
sale
during
an
Open
House
in
a
neighborhood
in
Clarksburg,
Maryland
on
September
3,
2023.
Roberto
Schmidt
|
AFP
|
Getty
Images
It’s
no
secret
that
the
housing
market
looks
far
different
than
it
did
a
few
years
ago.
While
surging
mortgage
rates
and
housing
prices
have
taken
away
consumers’
purchasing
power,
low
supply
has
kept
the
market
competitive.
As
a
result,
affordability
has
tumbled
dramatically
from
the
early
days
of
the
pandemic.
These
six
charts
help
explain
what
this
unique
moment
looks
like
—
and
what
it
means
for
you:
The
30-year
mortgage
rate,
a
popular
option
for
home
buyers
utilizing
financing,
is
key
to
understanding
the
market.
This
rate
is
essentially
the
borrowing
costs
tied
to
purchasing
a
home
with
financing.
A
higher
rate,
in
reality,
results
in
more
interest
due
on
a
home
loan.
For
the
past
several
months,
this
rate
has
hovered
around
the
7%
level.
While
it
has
cooled
after
touching
8%
late
last
year,
it’s
still
far
higher
the
sub-3%
rates
consumers
could
lock
in
during
the
first
years
of
the
pandemic.
Housing
prices
are
also
central
to
the
equation
for
everyday
Americans
decision
how
much,
or
if,
they
can
afford
to
spend.
The
Case-Shiller
national
home
price
index,
which
is
calculated
by
S&P
Dow
Jones
Indices,
has
notched
record
highs
this
year.
High
prices
can
elicit
different
feelings
by
group.
For
hopeful
homeowners,
it
can
raise
red
flags
that
they
are
planning
to
buy
at
the
wrong
time.
But
current
owners
can
see
reason
to
celebrate,
as
it
likely
means
their
own
property’s
value
has
risen.
With
both
mortgages
and
prices
up,
it’s
not
surprising
that
affordability
is
down
compared
with
the
early
innings
of
the
pandemic.
There’s
a
few
different
readings
of
affordability
painting
a
similar
picture.
One
from
the
National
Association
of
Realtors
found
affordability
tumbled
more
than
33%
between
2021
and
2023
alone.
The
Atlanta
Federal
Reserve’s
gauge
showed
the
economic
feasibility
of
home
ownership
plummeted
more
than
36%
when
comparing
April
to
the
pandemic
high
seen
in
summer
2020.
Another
way
the
Atlanta
Fed
tracks
this
is
through
the
share
of
income
needed
by
the
typical
American
to
afford
the
median
home.
Nationally,
it
last
required
43%
of
their
pay,
well
above
the
30%
marker
considered
the
threshold
for
affordability.
It
has
been
considered
unaffordable,
or
above
30%,
since
mid
2021.
The
Atlanta
Fed
also
breaks
out
what’s
driving
the
current
lack
of
affordability.
While
significant
pay
increases
in
recent
years
have
helped
line
wallets,
the
bank
found
that
the
negative
impact
of
higher
rates
and
list
prices
have
more
than
outweighed
the
benefits
of
a
bigger
paycheck.
While
the
current
mortgage
rates
are
high,
a
team
at
the
Federal
Housing
Finance
Agency
found
a
very
small
proportion
of
borrowers
are
actually
locked
in
at
these
lofty
levels.
Just
shy
of
98%
of
mortgages
were
below
the
average
rate
seen
in
the
fourth
quarter
of
last
year,
the
FHFA
found.
Nearly
69%
had
a
rate
that
was
a
whopping
3
percentage
points
below
that
average.
There’s
two
major
reasons
for
why
such
a
small
share
are
paying
current
rates.
The
most
obvious
is
that
the
housing
market
got
hot
when
rates
were
low,
but
cooled
significantly
in
the
current
period
of
higher
borrowing
costs.
The
other
answer
is
the
race
to
refinance
when
rates
were
below
or
near
3%
early
in
the
pandemic.
That
allowed
people
who
were
already
homeowners
to
take
advantage
of
these
relatively
low
levels.
