Where are the most affordable cities in the current housing market?
With the national average for a 30-year, fixed rate mortgage hovering around the 7% mark*, you would think that homeowners would be scared off of the current market. However, the recent data on the housing market shows that buyers are coming into the market and they are not deterred by higher mortgage rates.
According to a report from Freddie Mac, homebuyers are starting to realize that they’ll have to marry their next house and date their mortgage rate. Freddie Mac chief economist Sam Khater said, “Mortgage rates have hovered in the six to seven percent range for over six months and, despite affordability headwinds, homebuyers have adjusted and driven new home sales to its highest level in more than a year. New home sales have rebounded more robustly than the resale market due to a marginally greater supply of new construction.”
While most homebuyers are unlikely to welcome higher mortgage rates, new affordable housing construction has started to heat up, and there may be additional units coming into the market over the summer and fall in several popular metro areas. More affordably priced units could help offset higher mortgage rates.While the current housing market can be a challenge for homebuyers, there are still metro areas that have affordable housing. TheStreet.com has reviewed the current landscape and has found the 10 most affordable areas in which middle-income buyers can find housing.
Ohio dominated the list with five of the top 10 most affordable metro areas in the U.S. Youngstown, Akron, Toledo, and Cleveland were the top four most affordable metro areas, and Dayton came in at the 10th spot on the list. The median sale price of a single-family home in the Youngstown, OH metro area is still only $139,900.
While it may be a challenge to navigate elevated housing prices and higher mortgage rates, it’s still possible to find affordable housing in the current market.
Do boomers want to re-enter the housing market?
A recent survey showed that the Baby Boomer generation would rather remodel their existing home or live with their kids instead of trying to re-enter the current housing market. Most boomers are looking to downsize, but a lot of them have mortgage rates under 4% and don’t want to buy back into the market at elevated prices and higher rates than they’re currently getting.
Rather than move, homeowners are reinvesting into home renovations. 61% of homeowners that renovated their homes in 2022 stated that they plan to live there for 11 years or more. The largest group of homeowners renovating? Baby Boomers were 59% of homeowners that completed a renovation project in 2022.
The concern here is that older homeowners are staying in their homes instead of looking to downsize. That’s partially driving the lack of available housing and kept housing prices up over the past few years.
What happens if mortgage rates stay elevated?
In a recent article from CBS News, mortgage experts from different areas of the real estate market were asked what homebuyers should do if mortgage rates stay higher for longer. While there’s no way to know which direction mortgage rates will head, there are steps homebuyers can take to put themselves in a better position.
The experts surveyed had a few different ways to approach the current housing market. Tips offered from experts from Freddie Mac include:
- Buy a home now and consider refinancing later
- Look to make a larger down payment
- Consider different loan options like an adjustable-rate mortgage
- Stay put and renovate your current home
- Negotiate a mortgage rate buy down program
However, they also emphasized that there’s no clear-cut strategy for the current housing market, and every situation is different. Discussing your options with mortgage lenders and educating yourself on the real estate market will help you to make a more informed decision.
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