Home Sweet Home

If you’ve been following the housing market over the last couple of years, you’ve likely heard about growing affordability challenges. According to experts, the key factors that determine housing affordability are projected to improve this year. The three measures used to establish home affordability are home prices, mortgage rates, and wages.

Mortgage rates shot up to over 7% last year, causing many buyers to put their plans on hold, but things are looking different today as rates are starting to come down. George Ratiu, Senior Economist at realtor.com, explains, “With inflation showing a tangible slowdown, I do expect mortgage rates to follow suit in the months ahead.” Even a small change in rates can impact your purchasing power. If 7% rates paused your homebuying plans last year, this could be the opportunity you need to get back in the game.

The second factor at play is home prices. Home prices have made headlines over the past few years because they skyrocketed during the pandemic. While prices will likely be flat this year in some markets, the Phoenix area is expected to see slight declines.

The final component in the affordability equation is wages. When you think about affordability, remember the full picture includes more than just mortgage rates and prices. Wages need to be factored in as well. Because wages have been rising, many buyers have renewed opportunity in the market.

While affordability hurdles are not completely going away this year, based on current trends and projections, 2023 should bring some sense of relief to homebuyers who have faced growing challenges. As Mike Fratantoni, Chief Economist at the Mortgage Bankers Association (MBA), says, “Rates are expected to move lower for the year, and home price growth is expected to cool, both of which will help affordability challenges.”

If you have questions, contact your local real estate expert. You’ll also want to make sure you have a trusted lender so you can explore your financing options. You may be closer to owning a home than you think.

Submitted by Christie Giannetto | REALTOR® | REAL Broker