With the mortgage interest rates having moved lower and the move towards renting and apartment house living on the rise, purchasing a home for the first time is more affordable than ever. Millenials are finding that house prices are low enough with the right interest rate to be more affordable than rent in many cases.
First American Financial Corp released the March 2019 First American Real House Price Index (RHPI). The RHPI measures the price changes of single-family properties throughout the U.S. adjusted for the impact of income and interest rate changes on consumer house-buying power over time at national, state, and metropolitan area levels. Because the RHPI adjusts for house-buying power, it also serves as a measure of housing affordability. The index showed that nationally, affordability improved on a year-over-year basis for the first time since 2016.
“What began as a modest shift toward a buyers’ market in six cities last month has expanded into a national shift in affordability,” said Mark Fleming, chief economist at First American. “The shift is a departure from the long-term trend in the Real House Price Index (RHPI), which had been steadily increasing throughout the rising rate environment that began in 2017 and continued until late 2018. Now, surging consumer house-buying power is increasing demand.”