Are homes more affordable than last summer?
Question of the week: Are homes more affordable than last summer?
Answer: No. And maybe yes.
Looking at the median home prices for 2023 and 2024, using the 30-year fixed rate mortgage for the last Friday of July 2023 and July 2024 here is a look at monthly mortgage payments and amount of down payment needed (using 20% down payments and 80% loan to value mortgages).
As you can see, July to July the median prices are higher, the down payments are higher, and the monthly principal and interest payments are higher than one-year ago.
That said, with rates dropping since the end of July, the payments on the July median prices are a little bit less than the monthly payments from last July. We will not know until next month if the 30-year fixed rate and median prices for August 2024 will show higher or lower payments.
Note, even though the payment may be slightly lower, because the median prices increased 6.5 – 7.0% in the past year, the down payments are considerably higher than one year ago.
Digging into the data from the California Association of Realtors, we see that statewide the median price increased 6.5% from last July, however the median price dropped 1.6% from June—as did interest rates from June to July. Because of this the median home statewide was more affordable in July than it was in June.
More locally, in Los Angeles County the July median price was 6.7% higher than a year a year ago, and up 2.2% from June. Because the median price rose more than mortgage rates dropped from June to July, in LA County, homes are less affordable.
While the median home in Orange County was less affordable in July than it was last year, it was more affordable than it was the prior month. The median home price in June for Orange County was $1,450,000, 4% higher than it was in July. As well, because of the price, with 20% the mortgage in June would be $1,160,000**—too high for a conforming mortgage rate resulting in a high-balance mortgage rate that was 7.375% in June. As a result, the monthly payment for the median Orange County home in June would be $8012 per month, compared to $6937 in July, a savings of $1075 by waiting one month.
** Being very strict with my calculations. In reality, we would advise the client put down $10,175 more to get a conforming mortgage for a 6.375% rate and $7173 payment, $236 more than if client waited one month and purchased in June.
Depending on where in California you are buying, because rates are lower than last year, purchasing a new home may be more affordable in terms of payment and cash to close than a last summer—or than earlier this summer.
Schedule an appointment to discuss your options if you are considering purchasing a new home or property, or refinancing an existing one and want to know the mortgage options available to you.
Have a question? Ask me!
Rates for Friday August 23, 2024: Rate markets had already priced in cut by the Fed next month. Today Federal Reserve Chair Jerome Powell in a much anticipated speech in Jackson Hole removed any uncertainty that the Fed’s benchmark rate will be cut next month. His statement also indicates that it will be the first in a series as the policy of the Fed will be changing from fighting inflation to boosting employment and trying to avoid a “hard landing” for the economy, i.e. a recession. Investors like what they are hearing and rates hit, for the second time in three weeks, a twenty month low.
FIXED RATE MORTGAGES AT COST OF 1.25 POINTS LOCKED FOR 45 DAYS FOR PURCHASE TRANSACTIONS:
30-year conforming 5.875% Down 0.125%
30-year high-balance conforming 6.500% Down 0.125%
Please note that these are base rates and adjustments may be added for condominiums, refinances, credit scores, loan to value, no impound account and period rate is locked. Rates are based on 20% down with 740 FICO score for purchase mortgages.
Greetings from Vancouver, where Leslie and I are spending a few days before getting a on big boat with 2650 soon to be closest friends to cruise through Alaskan waters.
Vancouver is a beautiful city, much like Seattle, but without, from we have seen so far, much of the outdoor living arrangements clogging sidewalks.
Since we discussed median home prices above, the median price for a single family home in Vancouver is about $1.6 million Canadian, devaluing for the exchange rate to the United States dollar by about 75% , the median price is about $1.2 million greenbacks.
Driving in from the airport we saw a lot of new, and ongoing, housing construction on the main road for apartments, condos, multifamily housing, in neighborhoods with older large homes on large lots. As well, plenty of cranes in the downtown areas building large hi-rise residential properties.
Driving past a gas station and seeing a price of 1.70, it took me a minute to realize that we were not back in time to 2016, but that the price was per liter (or litre here in Canada). Doing some quick conversion of liters to gallons and dollars Canadian to U.S. I ascertained the cost is about $4.83 per gallon—not too incomparable to Southern California. Our cab driver when asked about the gas price groused that there were too many taxes, one that is national and another put on by the Provence of British Columbia—that too is comparable to our home region with California’s different taxes on fuel.
