November 11th, 2022
In this video, Greenville Real Estate Agent and Team Leader Dan Hamilton breaks down some of the major factors impacting home affordability, plus, offers some advice for buyers looking to take advantage of current market factors.
3 Factors Affecting Home Affordability
1. Mortgage Rates
It’s not hard to realize that mortgage rates have increased exponentially this year, having risen nearly 4% points since this time last year. Right now it just costs more to borrow money and that is definitely impacting home affordability. However, if you consider historical trends, a 7% rate is right in line with or even lower than many other decades. See the chart below for reference:
Yes, mortgage rates have risen dramatically in the last year and that is severely impacting home affordability. But in perspective, it’s easy to see this increase is a leveling out of rates historically rather than an unrealistic spike.
2. Home Prices
Home prices have been jumping pretty significantly the last couple years as buyer demand soared beyond home inventory. As agents, we were seeing multiple offers, bidding wars, waiving contingencies and more dramatic measures as desperate buyers tried to buy a home. This year, while home inventory has remained low, we have seen a slight decrease in demand resulting in home price stabilization and even price cuts.
Our team is watching and adapting as inventory begins to rise here in Greenville. Though home prices will not drop to pre-pandemic levels, buyers can expect slightly more reasonable pricing and flexibility in negotiation with sellers. If you have been waiting for things to calm down, now is the time to take advantage of the market lull!
The one big, positive component in the affordability equation is the increase in American wages. Median weekly earnings of the nation’s 120.2 million full-time wage and salaried workers was 6.9% higher in Q3’22 than it was this time last year. This increase in wages in largely due to the inflation we’ve been seeing over the last year.
While mortgage rates and home prices can negatively impact home affordability, we can’t deny buyers are still purchasing homes. And a big reason for that is increasing wages. When you lock in today’s interest rates and home values now, your home gradually becomes less of an expense over time as you pay off your loan and your income increases.
The Bottom Line
There are many factors that impact home affordability in Greenville, SC. If you are interested in learning whether you can afford a home in the Upstate, give our team a call! With over 2 decades of experience, our team has navigated this and many other real estate markets. We know how to help you use today’s affordability factors to your advantage and to set you up for long-term financial success. Give us a call at 864-527-7685 to learn more or fill out one of the following forms and we’ll reach out to you!
Dan Hamilton is the founder of Hamilton & Co. and the lead listing agent for the team. He is the only agent in the Upstate endorsed by Shark Tank star and real estate mogul Barbara Corcoran. Additionally, Dan hosts a weekly radio show on The Answer 94.5 and 106.3 WORD giving tips and advice on real estate and is a frequent contributor for real estate on Your Carolina TV show on WSPA Channel 7.