This may be a great spring for clients looking to buy a home.
Low mortgage rates and rising wages have boosted home purchasing power in many metropolitan areas, according to new housing data.
With overall home prices holding steady, the markets with the sturdiest values give their homebuyers the most power. Though favorable conditions could dissipate with a swing in demand, right now, mortgage rates remain low and wages continue to grow.
“While 2018 was largely characterized by declining affordability, ending the year with a 5% yearly decline in house-buying power, this trend reversed sharply in early 2019,” Mark Fleming, chief economist for First American Financial, said in a press release.
“Moderating home prices, in conjunction with gains in household income and declining mortgage rates, boosted affordability for potential homebuyers,” he said.
While in cities like Providence, Rhode Island, real house prices shot up 17% year-over-year in January, other areas saw such growth below 1%, according to a First American Financial analysis of home values, factoring in local wages and mortgage rates in large cities.
The data, from the First American Real House Price Index, measures annual home price changes, taking local wages and mortgage rates into account “to better reflect consumers’ purchasing power and capture the true cost of housing.”
The January 2019 data is ranked by smallest year-over-year changes in RHPI for cities where the current value is less than 100 (an RHPI reading of 100 is equal to housing conditions in January 2000).
From the middle of the country to the Pacific Northwest, here’s a look at cities where clients looking to buy a home wield the most purchasing power.