Income needed to buy a home as Fed inflation fight keeps rates high

 

Friends of The Basis Point, Mark Fleming (Chief Economist, First American) and Jeff Taylor (Founder & CEO, Digital Risk) were tapped by USA Today for expert intel on current and future state of the housing market. Below are key remarks from each followed by a link to the full piece.

Mark offers intel on where home prices are headed:

“Yet, housing supply remains so restricted, that any uptick in demand will put upward pressure on prices. This is the dynamic that played out in March, as the spring home-buying season ushered in more demand for homes, while insufficient supply prompted buyers to compete and bid up prices.”

And Jeff provides stats with smart advice on rates and affordability:

“With 5% down and 7% rates and $600 in non-housing debt, borrowers qualify for these purchase prices if they make above $100,000. We’ve seen that buyers are more likely to act when income required to qualify drops below $100k. We need rates in the lower-6% range for this to happen. So homebuyers shouldn’t be discouraged. Instead, they should get pre-approved by lenders now, and those pre-approvals will only look more attractive as rates drop.”

So here are the takeaways for homebuyers:

– Even with high rates, low home inventory will support home prices.

– So don’t wait for home prices to crash because it’s unlikely.

Hit the link below for the full post.