By Gino Blefari, President & CEO, Intero Real Estate
Services, Inc.
As we continue to closely watch the housing recovery, it's
interesting to point out how markets can contrast wildly with one another right
now.
For instance, some housing markets are either chugging along
slowly or still struggling to get values up to a level that pulls more local
homeowners out of low or no equity situations. And other markets are so hot
that you'd think the downturn never happened.
One of the statistics that is strikingly different in
individual markets right now is
affordability.
In some markets, we're still seeing some of the most
affordable housing situations in decades. But in other markets where prices
have risen more rapidly, affordability has already become an issue once again,
pricing out some families.
John Burns Real Estate Consulting this month released data
showing the share of median household income devoted to home mortgage payments
recently surpassed historical averages in six of 30 major U.S. housing markets.
Five of the markets were in California – San Francisco, Los
Angeles, Orange County, San Jose and San Diego. The sixth was Portland, Ore.
Burns said that during the downturn, prices in those cities
were more affordable than their historical averages dating back to 1980. But
prices have risen rather quickly along with the recovery.
Couple that fact with rising interest rates on mortgages and
it's potentially a dangerous mix for first-time buyers in these markets who may
struggle to get the right price point. Rates are still really low by historic
standards, but a slight increase can make a huge difference in affordability
for many families.
This new state of affordability for the six markets
identified by John Burns should be a red flag for buyers who may be on the
cusp. There's no time like today to make a move. Economists expect rates on
mortgages to keep climbing. And in markets facing restricted supply, values
will continue to increase a fast clip due to demand.
We will continue to watch these six markets, as well as the
recovery at the national level. But for now, it seems like an obvious time to
say "Carpe diem!" if you've been waiting to buy your first home.
