ATLANTA — You may have heard that the housing marking is slowing down. But that’s not necessarily because less people are wanting to buy homes. People still want to buy houses --- but it’s becoming less affordable to do so. And with that, rent continues to inch upward, making those options less than ideal for people as well.
11Alive set out to verify if it’s getting more expensive to rent and buy a new home. Here's what we found.
Is housing becoming less affordable?
Yes, across the board, housing is becoming less affordable.
WHAT WE FOUND
The National Association of Realtors Housing Affordability index keeps track and measures the degree to which a typical family can afford the monthly mortgage payments on a typical home.
They do this by the value of 100, which means a typical family has exactly enough to quality for a typical home. Anything over 100 means they have more than what’s needed; anything below 100 means they have less than what’s needed.
In June of 2021, the housing index was 143.1 percent, and the average mortgage rate was 3.03 percent. Now, the housing index is 98.5 percent, and the average mortgage rate is 5.06 percent. This means the average family could afford 40 percent more than the price of the median-priced home in 2021, but now that's not the case. In all, it’s the lowest affordability rate since 1989.
The kicker: the housing affordability index calculates values assuming there’s a 20 percent down payment. If you have less than this or none, that makes an average mortgage even more out of reach.
Those numbers can explain why single-family home sales are at a seven-year low. Sales were down 5.9 percent from June and 20.2 percent from 2021. And the homes that are selling, are priced higher. The median price for a home is $403,800, nearly 11 percent higher than 2021. Although, that price is down $10,000 from a record high of $413, 800 in July of 2022.
So, while mortgages are becoming less affordable for a typical family, renting isn’t much better. The average apartment rent for 971 sq. ft. in Atlanta is $1,861, according to RentCafe. But across the country, the average monthly rent was $2,031 in July. That’s up 13.7 percent from the same time in 2021.
With all of this, the median family income only rose 5.8 percent in the last year, putting a bigger squeeze on affording mortgages and rent prices.
There is a silver lining.
People still set on trying to buy a home right now would have to budget differently or lower the price range for the home they’re looking for. But -- there are more options than in 2021 and 2020, because the number of homes for sale have increased. There’s also less bidding wars than in the early days of the pandemic.