According to a recent MReport article, interest rates are very low, but Americans are still struggling with affordability. The Federal Reserve Bank of Atlanta’s Home Ownership Affordability Monitor index reported that interest rates on 30-year mortgages are at all time lows. Unfortunately, this has not helped making purchasing a home any more affordable. Due to COVID-19, Americans across the country have suffered from income losses. The report stated that the median household income was down 5.4% in November, compared to November of 2019. In the same time frame, the national median home price increased by 14%. Despite mortgage rates decreasing to 2.8% in November, Americans are unable to take advantage of these low rates because of the financial strain COVID-19 has caused. The report states that the median home prices are unaffordable for the median income buyers.
WHAT CITIES HAVE AFFORDABLE HOMES?
The report emphasises that these are national averages, therefore there are still areas of the U.S. where homes are affordable. The research reveals that Rochester, Spokane Valley, and St. Louis have all seen improvements in affordability by roughly 7%. Experts believe this is because of the lower mortgage interest rates and home prices. Home prices remained stable in cities such as Washington, D.C. and San Francisco, which allowed for a slight increase in affordability. Milwaukee, New York City, and Cape Coral had large drops in affordability. According to the report, “The median home price in Milwaukee climbed 19.9% over a year’s time, New York’s median price increased 11.9%, and Cape Coral’s price went up 15.9%”. Overall, in many areas of the country the low interest rates and low inventory has caused home prices to increase. Unfortunately, experts predict that this shortage of homes will not be fixed in the near future.
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Click here to read the Federal Reserve Bank of Atlanta’s Home Ownership Affordability Monitor index.
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