Buyers Rejoice! Affordability Is Improving

After a years-long seller's market, conditions are finally shifting in favor of prospective home buyers! That is the finding of data and analytics company Black Knight's latest Mortgage Monitor Report, which examines mortgage performance, housing, and public records information each month to determine current trends in real estate. The report describes how the continued slowdown in annual home price appreciation and the recent drop in mortgage interest rates are combining to provide relief to hopeful buyers who had been facing an affordability crunch.

Although home prices continue to increase year-over-year, as of the end of December they had experienced four consecutive monthly declines to end 2018. According to Ben Graboske, president of Black Knight’s Data & Analytics division, the result is that "the average home has lost more than $2,400 in value since the summer of 2018." December was also the 10th consecutive month in which annual price growth slowed down, ending the year at 4.6% after peaking at 6.8% in February. Importantly, Black Knight points out that this reduced rate of growth is still above the 25-year average of 3.9%.

Meanwhile, mortgage rates this week dipped down to just 4.49% and have now fallen by over half a point from their 52-week high of 5.1%. Black Knight calculates that this reduction is equivalent to a 6% increase in purchasing power for home buyers! They also report that home affordability has now risen back to levels last seen around this time last year, with further increases to come.

Taken together, slowing home price growth and reduced mortgage interest rates should give those saving to buy a home in 2019 a reason to be happy! It also means that those home owners who are considering selling might want to do so sooner rather than later!