Let’s talk honestly about affordability for a second. If you’ve been thinking about making a move, you deserve real, transparent insight into what’s happening in today’s market.
Here’s the full picture of what’s really happening, the good and the challenging, so you can better understand what it means for your move. Because while mortgage rates definitely impact affordability, they’re only one piece of the puzzle.
Mortgage Rates Have Been Rising
After more than a year of rates mostly trending downward, they’ve started creeping back up again. And if you’re hoping to buy a home, that’s probably not the news you wanted to hear. But it is happening, and here’s what’s behind it.
Mortgage rates don’t respond well to uncertainty.
With continued global uncertainty, ongoing tensions in the Middle East, and inflation still hanging around, several factors continue to influence mortgage rates. Colin Robertson, Founder of The Truth About Mortgage summed it up well:
““You can’t have $100 a barrel oil and not expect inflation to rise, which translates to higher bond yields and mortgage rates.”
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Take a look at the graph below. It uses data from Mortgage News Daily to show how much those factors have been impacting things.
It’s a pretty noticeable shift in a pretty short amount of time, especially compared to where we’ve been. And it might have you wondering if you should just wait it out or if rates will come back down once things calm down.
It’s possible, but it really depends on how the ongoing geopolitical conflicts unfold and whether inflation stays elevated afterward, and for how long that lasts.
Rates probably won’t come down much until both of those factors start to improve. And even when they do, most experts don’t expect a big drop, maybe just into the low to mid 6s. That’s the reality right now, and it’s good to keep in mind.
So, should you wait for lower rates? Most experts would say if you can afford to buy and you find the right home, it can still make sense to move forward. The truth is, no one really knows when rates will come back down, and it’s worth asking how long you want to keep your plans on hold.
Wages Are Outpacing Home Prices
You’ve probably noticed inflation making everything more expensive, and there are plenty of headlines about the cost of living rising faster than paychecks. That’s a real concern, and you might even be feeling it yourself. But what you don’t always hear is that it’s not all bad news.
Data from the Federal Reserve Bank of Atlanta and Redfin show that wages have actually been rising faster than home prices.
Recently, wages have been growing at about 4% year over year
Meanwhile, home price growth has been closer to 2% year over year
As a buyer, it helps when your income grows faster than home prices because it makes buying more manageable financially and slowly eases the affordability challenge over time. That’s exactly what we’re seeing right now, and even small gains like this really do add up.
One big reason wages are starting to catch up with home prices is that home prices have actually stayed relatively steady.
Existing Home Prices Have Held Steady
Take a look at the graph below. It uses home price data from the National Association of Realtors over the past four years. What you’ll notice is that there hasn’t been a big surge or a sharp drop, just steady, modest growth over time.
Part of what’s keeping prices so steady is that buyers finally have more options. That means less competition, more room to negotiate, and more time to find a home that truly fits your life instead of feeling like you have to grab whatever’s available before someone else does.
That gives you a real opportunity to find something that fits your budget, even with today’s rates. And at the same time, you’re not really falling behind on prices while you take the time to make a thoughtful decision.
Bottom Line
Yes, rates have been up and down, and global uncertainty is keeping them from settling anytime soon. There’s no way around that. But when you look at the full picture of affordability, it’s more complex than what the headlines make it seem.
Want to see what the numbers actually look like for your situation? Let’s talk. Reach out and we can set up a quick, no pressure conversation.
