Some frustrated homebuyers want to build a time machine and go back a year or even six months.
Between much higher home prices and sharply higher interest rates, monthly payments for typical homes purchased in Metrodenver last month were 54.5% higher than in May 2021. Updated research From Seattle-based real estate research firm Zillow.
Its “typical” payments in Denver reached $ 3,394 per month in May. This is above the national average of $ 2,031 and above the typical Metro Denver rent payment of $ 1,988 obtained from the Zillow ObservedRent Index. In Metro Denver, rent inflation is 14.2% per year, just part of the 54.5% increase seen in home payments on new purchases.
Those who owned a home before the pandemic, or who bought a home or refinanced a mortgage at low interest rates in 2020 and 2021, are far more than those who are still trying to buy. I am in a good position. And while it was as bad as it was in May, it got worse this month.
“Mortgage rates have taken an unprecedented leap in the last two weeks and have increased rapidly as housing costs have risen,” said Nicole Bachaud, an economist at Zillow. “We are already seeing signs of declining demand and we expect these recent rate hikes to accelerate the necessary rebalancing of the market. Shoppers are less competitive in housing than the enthusiasm of the last few months. However, purchasing power is declining. “
Zillow warned that an income increase of about 6% couldn’t keep pace, creating the most important affordable challenge in 15 years. April figures show that national monthly payments consume 28% of homeowners’ monthly income. Given the recent rise in interest rates, that ratio could have reached nearly 30% of the red zone. Housing collapse continued when affordability finally bottomed out at these levels in July 2006.
In essence, homebuyers who are brave enough to stand up to the Metro Denver market are paying 1.5 times more than 12 months ago for comparable midrange homes.
Denver is also not the most extreme market. Home payments in Raleigh, NC have increased by nearly 70% over the past year, but are $ 900 below normal payments found in Denver. Nashville; Las Vegas; Orlando; Tampa Bay, Jacksonville, Florida. Atlanta; Phoenix and Charlotte, NC all made more than 60% annual profit on their monthly payments last year.
Usually, when interest rates rise as sharply as ever, the rise in home prices softens and even reverses. But despite the sharp rise in interest rates this year, rising home prices appear to have reached an inflection in the past month or so. House prices are still rising, but at a slower pace.
Just over 6 out of 10 residents of Colorado rate housing costs as a “very” serious problem for the state, and another 25% say it’s a “very” serious problem. Pulse voting Conducted by the Colorado Health Foundation. This is about the same as rising inflation when surveyed people come to cite as the most pressing concern facing Colorado.