The median single-family home-sale value in the Washington region increased just under 12 percent in the third quarter of the year, according to new data, and the sales amount represented the 14th highest among 181 metropolitan areas surveyed by the National Association of Realtors.
The median single-family home value of $492,000 in the Washington area was up from $439,806 in a quarter that saw every single metro area surveyed post a higher median sales price.
Nationally, the median single-family sales price of $313,500 was up 12 percent from $280,000 a year before.
The growth was fueled by a number of factors, including record-low mortgage rates, a depleted nationwide housing inventory and pent-up demand after the COVID lockdowns.
The problem? The rate of home-price appreciation is running about four times the rate of income growth across the nation.
“Favorable mortgage rates will continue to bring fresh buyers to the market,” said Lawrence Yun, chief economist for the National Association of Realtors. “However, the affordability situation will not improve even with low interest rates, because housing prices are increasing much too fast.”
Sixty-five percent of metros – 117 areas out of 181 that were analyzed – witnessed double-digit price growth from one year ago. In comparison, only 15 metro areas recorded double-digit increases in 2020’s second quarter.
“As home prices increase both too quickly and too significantly, first-time buyers will increasingly face difficulty in coming up with a down payment,” said Yun. “Transforming raw land into developable lots and new supply are clearly needed to help tame the home-price growth.”
The biggest gainers in the third quarter were Bridgeport, Conn. (up 27.3%); Crestview, Fla. (27.1%); Pittsfield, Mass. (26.9%); Kingston, N.Y. (21.5%); Atlantic City (21.5%); Boise (20.6%); Wilmington, N.C. (20.6%); Barnstable, Mass. (19.4%); Memphis (19.1%); and Youngstown, Ohio (19.1%).
All four geographic corridors of the nation saw increases, with the Northeast rising 13.3 percent to $349,800; the Midwest up 11.1 percent to $246,900; the South up 11.4 percent to $274,300; and the West up 13.7 percent to $467,500.
Eight of the nation’s 10 most expensive metro areas are located in the West region, the remaining two in the East region. Those include San Jose ($1.4 million); San Francisco, ($1.125 million); Anaheim ($910,000); Honolulu ($866,200); San Diego ($729,000); Los Angeles ($708,900); Boulder, Colo. ($673,400); Seattle ($617,700); Bridgeport, Conn. ($591,400); and Boston ($588,100).
Rapidly rising prices take a toll on home affordability. With higher home prices, the monthly mortgage payment on a typical existing single-family home – one that is financed with a 30-year fixed-rate mortgage and 20-percent down payment – rose to $1,059 in the third quarter. This is an increase from the second quarter ($1,019) and from 2019’s third-quarter numbers ($1,032).
At the median U.S. family income of $81,477, mortgage payments accounted for 15.6 percent of income in the third quarter, an increase from the second quarter share of 14.8 percent but unchanged from the share seen one year ago.
With home prices continuing to rise, families needed roughly $50,819 in annual income to comfortably afford a mortgage on a typical single-family home, up from $48,912 in the second quarter and from $49,536 this time last year. A 30-year fixed-rate, 20-percent down payment mortgage is considered affordable if the mortgage payment accounts for no more than 25% of a family’s income. A home purchase was affordable because the median family income was $81,477.
In 125 of the 181 metro areas, a family needed less than $50,000 to afford a home. However, in eight metro areas, a family needed more than $100,000: San-Jose ($228,862); San Francisco ($183,907); Anaheim ($148,760); Honolulu ($141,600); San Diego ($119,172); Los Angeles ($115,886); Boulder ($110,083); and Seattle.
Fourth-quarter data is expected to be released in mid-February.
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