According to First American Real House Price Index, home buyers face the same affordability challenges in 2022.
First American’s Chief Economist Mark Fleming released the October 2021 First American Real House Price Index (RHPI). The RHPI measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state and metropolitan area levels. Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability.
Chief Economist Analysis: Real House Prices Increased 19.6 Percent Year Over Year
“Affordability sank to its lowest level since 2008 in October, as two of the three key drivers of the Real House Price Index (RHPI) swung in favor of reduced affordability relative to one year ago. Higher mortgage rates and record year-over-year nominal house price growth triggered a nearly 20 percent jump in the RHPI (rising RHPI values indicate declining affordability),” said Mark Fleming, chief economist at First American. “The soaring nominal house prices and uptick in mortgage rates swamped any affordability gains from the 3.6 percent yearly increase in household income. Since we know real estate is local, house-buying power and nominal house price gains vary by city, begging the question, where is affordability declining the most?”
The Five Cities Where Affordability Declined the Most
“Affordability declined year over year in all of the markets we track,” said Fleming. “The five markets with the greatest year-over-year decline in affordability were:
1.) Phoenix (+33.7 percent),
2.) Charlotte, N.C. (+32.3 percent),
3.) Tampa, Fla. (+30.9 percent),
4.) Jacksonville, Fla. (+29.3 percent),
5.) Memphis, Tenn. (+27.5 percent).