Housing affordability perceptions are changing

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Published Date 5/7/2021

Perception, as well as the passage of time, can mean everything in real estate. While the past year has seen many homebuyers stuck in the mud regarding buying a home (low inventory/high prices), for some home buyers, housing affordability has improved, says the National Association of Homebuilders. The NAHB cites a Housing Trend Report for the first quarter of 2021 in which 35% of buyers report being able to afford half or more of the homes available for sale in their markets.

A year ago, during that same quarter, that share was only 23%. “The increase is an indication that still relatively low mortgage rates continue to have a stronger impact on some buyers’ perceptions of affordability than rising home prices,” says NAHB’s Rose Quint. “Nonetheless, a majority of buyers (65%) do report being able to afford fewer than half the homes available in their markets, but that share is down from 78% a year earlier.”

Interestingly enough, millennials report the most improvement in housing affordability perceptions in the last year. “Between the first quarters of 2020 and 2021, the share of buyers of this generation who can afford half or more of the homes available doubled (22% to 44%), while changing little among the other generations,” says Quint. “Across regions, the share of buyers who can afford half or more of the homes more than doubled in the Northeast (19% to 46%) and rose significantly in the West (20% to 37%).”

Source: TBWS

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