Buy a Home Now Before Prices Go Even Higher
Think housing is unaffordable now? Buy a home now before it gets worse next year
Now may be the best time to buy a home! The risk of home price declines remains low, but affordability is increasingly a concern in cities across the U.S., according to the Summer 2017 edition of The Housing and Mortgage Market Review (HaMMR) published by Arch Mortgage Insurance Company.
Arch has an interactive U.S. map comparing the states by risk posted on its website.
Price declines are less of a concern that affordability, according to the report. Strong housing market fundamentals suggest that the average risk of U.S. home price declines over the next two years remains unusually low at only 4 percent. The Arch MI Risk Index statistical model is based on nine housing market health indicators, including unemployment and delinquency rates and if home prices are over- or undervalued relative to incomes.
Statewide, Florida’s risk is slightly higher than the national average but still at a relatively low 9.4 percent. Many of Florida’s higher-risk areas cited in the report are in Miami and a handful of other Southeast Florida metro areas.
“A tight job market, interest rates that are still low and an overall shortage of housing are pushing up home prices faster than incomes,” says Dr. Ralph G. DeFranco, Global Chief Economist, Mortgage Services of Arch Capital Services. “That’s good news for those who already own, but bad news for those looking to buy. I expect prices and rates to rise, meaning affordability will only worsen from here. In fact, once mortgage interest rates reach 5 percent, homeownership in high-cost areas like California could be out of reach for many people who qualify now.”
Over the past two years, affordability has deteriorated the most in San Diego, Miami and the San Francisco Bay Area, as prices shot up faster than incomes. The greater New York City metropolitan area, in contrast, saw the largest improvement.
On a state level, Alaska, North Dakota and Wyoming remain most at risk of home price declines, joined this quarter by West Virginia. These states continue to be impacted by weak employment and home sales due to the unwinding of the energy boom or from high inventories of homes for sale.
Source: “Report: Buy a home now before prices go even higher,” Florida Realtors