RealtyTrac, the nation's leading source for comprehensive housing data, and Clear Capital, the leading provider of commercial and residential real estate valuations, data and analytics, and more, yesterday released a joint report showing that buying a home was at the most affordable level in two years in the first quarter of 2015 despite the average U.S. home price increasing at more than twice the pace of the average weekly wage nationwide over the past year.
RealtyTrac analyzed recently released average weekly wage data from the first quarter of 2015 and average prices for single family homes and condos derived from publicly recorded sales deed data. Clear Capital analyzed data from its Home Data Index to determine counties at highest risk and lowest risk based on affordability and potential for price growth. The results were very positive for those who are still looking for a sign to get into the housing market right now.
"Affordability is a key metric in determining the overall health of a housing market as it largely represents the barrier to entry for first time homebuyers. First time buyers represent the 'fuel' for which overall market growth is determined due to the fact that this demand segment starts a chain reaction that allows existing home owners to sell and move-up thereby churning the housing market and price growth," said Alex Villacorta, Ph.D., vice president of research and analytics at Clear Capital.
Windermere Chief Economist Matthew Gardner shared his insight on these changes and what they mean for some our local market. "There is no question that when interest rates start to rise it will impact home sales, but I expect wage growth to offset any pronounced negative effects in the Seattle market," said Gardner. "That being said, over the next year, I predict interest rates will rise to 5 percent, which in conjunction with the strong growth in home prices, could make affordability an even bigger issue than it already is, especially for first time buyers."
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