San Jose sees the biggest improvement in affordability
The housing market continued to swing in favor of homebuyers as household income and low mortgage rates improved consumer house-buying power.
First American Real House Price Index (RHPI) showed that house-buying power jumped 17.9% between November 2018 and November 2019, and inched up 0.2% month over month. The increase was due to a 2.6% year-over-year gain in the median household income.
Real house prices of single-family properties nationwide, meanwhile, went down by 8.1% year over year in November but were up 1.2% month over month.
“Even as nominal house prices have gained momentum because of the supply and demand imbalance, real house prices actually declined by 8.1% thanks to the benefit of increased buying power,” Fleming said. “Since we know real estate is local, house-buying power and nominal house-price gains vary by city, begging the question, where did affordability increase the most?”
Affordability rose in each of the 44 markets First American tracked. San Jose saw the most significant year-over-year gain in affordability, followed by Baltimore, Riverside, Calif., San Francisco, and Denver.
“In November, San Jose had the greatest year-over-year increase in affordability, mostly due to slower nominal house-price appreciation compared with the other markets,” Fleming said. “Baltimore had slightly higher nominal house-price appreciation compared with Riverside, 5.2% and 5.8% respectively, but outpaced Riverside when it came to house-buying power, growing by 22% versus Riverside’s 21%.”
