According to the S&P CoreLogic Case-Shiller Indices for June, home price gains are continuing to slow across much of the country, including in metro Denver, where they are starting to move in line
Despite Lower Interest Rates Affordability Issues Remain In Denver
While falling mortgage rates have put some energy back into existing home sales, new home purchases are taking a hit. According to Robert Dietz, chief economist at the National Association of Homebuilders, the key issue is housing affordability as single-family home sales will be flat this year.
Speaking recently at the National Association of Real Estate Editors annual conference, Dietz said lower mortgage rates, combined with a continued pivot by builders to more affordable housing products, should help lift new home sales in the second half of the year following a decline the past two months in Census Bureau counts.
Affordability remains a big drag on the market, with much of California, the Pacific Northwest and Colorado’s northern Front Range ranking among the most unaffordable areas in the country, according to an index from the NAHB and Wells Fargo.
Dietz cited the usual suspects on why new homes cost so much to build. Labor shortages continue to plague the industry, which had 404,000 unfilled jobs in April. Despite those shortages, the industry has failed to boost its productivity.
This lack of affordability is having quite the impact on buyers. A survey from Freddie Mac, which provides guarantees on mortgage loans, found the following:
More than half of those surveyed reported having to cut spending on both essential and non-essential items to keep a roof over their heads.
Younger renters, in particular, said they were getting squeezed by child care costs and student loan payments.
Among renters struggling to keep up, 44 percent said they had moved in the past two years in search of greater affordability. That is up from 30 percent early last year.
About 35 percent of homeowners struggling to make their mortgage payments said they had moved in the past two years to improve their situation, up from 26 percent a year earlier.
Around 82 percent of renters now view renting as the most affordable option available to them, up from 67 percent who held that position in February of 2018. That sentiment could impede home sales going forward.
While options may be more limited in Denver, there are still great deals to be found. If you’re ready to take the plunge into homeownership contact Metrowest. One of our experienced pros would love to help you start the process!
Ben Alan Leonard is currently serving as a Broker Associate with Metrowest Real Estate Services. He has invested, worked and lingered in the Real Estate field for many years. Previous to working w....
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