As we embark on the new year there has been much speculation of what is in store for the real estate market in 2019. During Q4 of 2018 there were discussions of a softening in the market with price increases slowing, more properties available on the market and less buyers reverting to the sidelines. However, this doesn’t mean that buyers have been finding it much easier just yet.
According to a recent report released by ATTOM Data Solutions, home affordability has reached its lowest level in 10 years during Q4. The data firm had researched affordability of homes in 469 counties and studied the percentage of income that would be required to buy a median priced home.
“Home affordability is getting worse nationwide,” says Daren Blomquist, senior vice president at ATTOM. But buyers shouldn’t lose hope. “We’re going to hit an affordability tipping point in 2019, where it becomes more affordable to buy. Buyers will have more inventory to choose from and they will be running against fewer multiple-offer situations.”
Areas Affordability is Getting Harder
Purchasing a home during the fourth quarter of 2018 became more challenging in 42% of the counties that were examined in this report as compared to that of Q3. These areas included select coastal communities in California as well as the Phoenix and Las Vegas areas.
“The coastal California markets are still highly unaffordable … because there is still a limited supply of homes and a lot of demand,” Blomquist says. So they’re less likely to be affected by a broader housing slowdown. “Those types of markets are going to operate a little bit outside of reality.”
Areas Affordability is Getting Easier
Although it was becoming harder to buy a home in many areas, there were some locations that showed that things were becoming more favorable. These counties include areas around Chicago, IL, Houston, TX, San Diego and Los Angeles CA and Miami FL.
“The rate of home price appreciation is slowing down in these markets. It’s slowed down enough where it’s actually on par with wage growth,” says Blomquist. “It means for buyers there’s hope to get into homeownership.”
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