Home size per dollar still largest in Memphis and the Midwest, despite declines driven by mortgage rates
-
Rising mortgage rates last year cut $305,000 off what a buyer could afford with a $3,000 payment, but that trend has started to reverse.
-
Affordable active markets in the Midwest and Great Lakes regions saw the largest declines in purchasing power in 2022, but still offer some of the biggest houses for the money.
-
Mortgage costs nearly doubled since 2019, but have eased slightly in recent months.
SEATTLE, Feb. 9, 2023 /PRNewswire/ — Home buyers’ mortgage payments have started stretching a bit further in recent months, a new Zillow® analysis shows.
As mortgage rates doubled last year, the home price afforded by a $3,000 payment1 plummeted from $865,000 in January to a low of $560,000 in October. That significantly changed the size and price of homes within a buyer’s reach. On average, a $3,000 monthly mortgage payment today buys a home 140 square feet smaller than a home purchased a year ago.
But as rates have dropped from a peak just above 7%, buyers are getting larger homes, with higher price tags, at a fixed monthly cost. The typical home value associated with a $3,000 mortgage payment is up about $60,000 since October and home size has recovered by 84 square feet.
“Mortgage rates have a huge impact on the types of homes buyers are able to afford. Rates that doubled over the past year carved an extra bedroom or office space off of homes at the national level, though the sting has lessened in recent weeks,” said Anushna Prakash, economic data analyst at Zillow. “Buyers in more affordable hot markets are still getting solid bang for their buck, despite losing a lot of purchasing power.”
The annual decline is more pronounced in some markets. Hartford saw the largest drop in what $3,000 per month can buy in 2022, losing 1,200 square feet. Buyers in Indianapolis and Clevelandboth lost out on more than 1,000 square feet in the last…
Read the full article here