After housing in the US soared out of reach for many buyers, some of the corners of the country where the housing market used to be affordable are seeing a significant increase.
According to data from the Federal Reserve Bank of Atlanta, more than 70 cities where home prices used to be better than the national average are now worse than average. In South Carolina, Glenwood Springs, Colorado, and Seneca, the biggest changes have occurred since the start of the pandemic.
Areas where home prices used to be more affordable than the US average have seen some of the steepest gains
Rising home prices while borrowing costs were low, and now sharply increasing mortgage interest rates as the Fed tightened to combat inflation resulted in the worst affordability of registered housing at the national level.
An average household would have to spend approximately 46% of its income to own a median-priced home. This may vary depending on your location. The Southeast has seen some of the steepest drops in affordability, said Domonic Purviance at the Atlanta Federal Reserve.
In Key West, Florida, the share of income needed to buy a median-priced home is nearly 100% of revenue, leaving no money for anything else.
Analysts are predicting a slump, with prices falling as high as two digits, bringing costs back into line with revenue. Still, there is little sign of the kind of unsold home inventory buildup that would accompany a full-scale price correction.
“We don’t necessarily know how it will play out” – Purviance.