Housing affordability now WORSE than it was in 2006 as the average 30-year fixed mortgage rate reaches two-decade high – but property prices STILL aren’t coming down
Home buyers are facing the least affordable market since 2006 as mortgages skyrocket and property prices remain high.
Figures from the Atlanta Federal Reserve show that affordability has fallen below levels seen during the housing bubble peak in the lead-up to the 2008 financial crisis.
It comes after data from government-backed lender Freddie Mac showed the average rate on a 30-year mortgage have now soared to a two-decade high above 7 percent.
The Atlanta Fed uses house prices, mortgage rates and average incomes to calculate an ‘affordability’ score each month. The latest figures, from June 2023, show the score has plunged to 69.5 – nearly 40 points below where it was in June 2020.
And the report doesn’t even take into account mortgage rates which have shot up again in August. It means this month is likely to become the worst month for housing affordability of the century, according to estimates by Fortune.
Buyers are facing a perfect storm of elevated mortgage rates which are deterring homeowners from moving. Many fixed 30-year deals when rates were around 2 percent – effectively trapping them in their current home.
A recent survey by Freddie Mac found 82 per cent of property shoppers felt ‘locked into’ their property. And one in seven homeowners who are not planning to sell their home cited their current low rate as the main reason for staying put.
This trend means inventory is stretched and few homes are on the market- keeping prices high.
In June, the median US house price was $372,825, according to the Fed. At the