Homes were flying off the market at unbelievable rates in 2019, but now the home-buying frenzy has progressively slowed down. Mortage prices have risen increasingly over the past few months, and nationwide inflation has buyers a lot more cautious.
"Strong demand and rising prices for homes are overwhelming the ability of low mortgage rates to keep monthly payments down," said Nicole Bachaud, Zillow economic data analyst. "As prices continue to outpace income gains, affordability constraints will start to slow home price growth."
Interest rates一the determining factor of affordability一dropped in 2018, and according to Zillow, the leading real estate marketplace, hit record lows in 2021. Zillow's latest analysis shows that interest rates are surging, but that's seemingly not the case in Houston.
Findings suggest that mortgage affordability rates will increase 1.6 percent by December 2021, for an 18.8 percent affordability, making the average monthly payment $1,567.
San Antonio and Dallas-Fort Worth both have similar forward-looking projections, with mortgage affordability sitting between 21 and 22 percent by December. Austin, on the other hand, should anticipate sky-high increases.
In June 2020, Austin homebuyers on average spent 19.7 percent of their income on mortgage payments, but by the next year, that figure rose to 25.3 percent一yet still more affordable than eight major U.S. metros.
As we inch closer to the winter months, that may no longer be the case. Monthly mortgage payments in Austin have soared faster than income growth, making the city much more Cali-esque. Zillow reports that by December, Austin should surpass Seattle, Miami and New York, leaving only expensive California metros beyond it. By December the Lone Star capital is looking at a 30.1 percent affordability in the coming months, with a mortgage payment priced at a steep $3,021, which according to the report, is widely considered cost burdened.
The feasible fix? Housing experts surveyed by Zillow say that relaxing zoning rules is the most practical and effective way to increase the housing supply.
"Increasing the available supply of homes -- especially more dense, affordable housing types like townhomes and condos -- will help balance the market and give renters and prospective home buyers opportunities to seek relief from being burdened by housing costs," Bachaud said.
For more information on these findings, visit Zillow.