Are Homes More Affordable Now? Have you been looking for a home, for a long time on The Main Line? I represent Main Line PA buyers, many of whom have held back waiting for rates to improve or for an influx of homes on the market. While homes are still less affordable than in 2019, we are seeing indications that homes are getting more affordable. According to expert Elijah de la Campa, a Senior Economist at Redfin:
“We’re slowly climbing our way out of an affordability hole, but we have a long way to go. Rates have come down from their peak and are expected to fall again by the end of the year, which should make homebuying a little more affordable and incentivize buyers to come off the sidelines.”
Let’s talk about the three primary factors influencing home affordability: mortgage rates, home prices, and wages.
First and foremost, Mortgage Rates are top of mind for most buyers. Mortgage rates have fluctuated between the upper 6% and low 7% range. This is higher than rates from several years back, but there’s a silver lining. Despite fluctuations, rates are still lower than their peak last fall when they approached nearly 8%. Also, experts anticipate a decline in rates in the coming year. Bright MLS expects rates to come down in the second half of 2024, but to remain above 6%. When rates drop lending becomes more affordable and your monthly payment more accessible.
The second factor is home prices. What are home prices going to do, I get asked this all the time. Projections suggest that prices will rise this year but at a moderate clip. Housing inventory is increasing and since there are new homes coming to the market, home prices are unlikely to soar. The last factor is wages. The increase in wages is a driver of affordability. According to the Federal Reserve, wages are rising at an accelerated pace, which benefits potential homebuyers with more income. It is important to note that wage growth is highly dependent on which state you are in and your location.
The Main Line PA is a luxury home market. We experience sustained demand and the impact of home prices due to inventory have been more pronounced than mortgage rates and wages. Mortgage rates are expected to decrease later in the year and home prices are projected to rise slightly and wages continue to grow, leading to better affordability overall. If you would like an outlook that considers your neighborhood, contact us today.
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