A not-so-favorable trend is driving up home prices in mid-sized metro markets. Homeowners from large metro areas who’ve recently sold their homes and made a small fortune are descending on cities like Philadelphia, Atlanta, Dallas and Phoenix with bigger homebuying budgets.
Out-of-towners have anywhere from 12%-29% more to spend than local buyers, driving up prices and putting the squeeze on local home shoppers. This looks like another new reality thanks to the pandemic and the shift to remote worker.
Mortgage rates bouncing back up
Just when we thought interest rates were moderating, volatility returns.
Rates jumped about a half a percent in two days to 5.5%.* Not the news homebuyers wanted to see. There are ways for homebuyers to prepare for the next drop, fingers crossed.
Start by getting pre-approved with your lender and then discuss your options for locking in a lower rate when one comes along. The key is to do the upfront work now and be ready to move quickly when the market changes. If you wait until rates tick down and then act, there’s a good chance you’re going to miss your window.
Home rentals keep jumping
The great remote work migration has certainly shaken up home prices across the country. For example, the salary need to buy a home in Portland is not what it used to be. According to HSH, a home buyer in the Portland Metro area will need an average salary of $109,266.67 to afford the average home in the area, an increase of over 25% year-over-year.
Today, the national average salary needed to buy a home is $76,000, that’s $9,000 below the U.S. median household income. This gap has some homebuyers going the rental route, or relocating to cities that fit their salaries.
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* National average rates accurate as of 8/4/22 from Mortgage News Daily and are not advertised rates from Guaranteed Rate.
John Kistner is Guaranteed Rate’s Market Analyst. Market Updates are designed to provide readers with a high-level yet insightful view of how economic news, events and trends affect mortgage rates and the homebuying process.